What is the major issue to be considered

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Question - You are the audit partner assigned to the audit of La Trobe Financials Ltd. You issued an unmodified auditor's report for the year ended 30 June 2018, indicating that the financial report gave a true and fair view. In December 2018, four employees of La Trobe Financials were charged with systematically and deliberately entering fictitious transactions and embezzling about $20 million. Your firm has been notified by La Trobe Financials solicitors that it is taking legal action against you over the audit for the year ended 30 June 2018. They claim that you and your audit team were negligent in conducting the audit, by failing to identify the fraudulent activities of the employees of La Trobe Financials.

Required -

(a) Detail the legislative actions that have been taken to reduce the extent of an auditor's liability. Explain why these reforms were introduced.

(b) What is the major issue to be considered in determining whether La Trobe Financials was guilty of contributory negligence?

Reference no: EM133028732

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