AAT Level 4 External Auditing (ETAU) Practice Test

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For negligence to be proved against an auditor, which elements must be established?

Duty of care existed; It was breached; It caused loss to claimant.

Negligence against an auditor is shown by three elements: a duty of care owed to the claimant, a breach of that duty by failing to meet the professional standard of care, and a loss that results from that breach. The duty arises from the auditor–client relationship and the reliance on financial statements, the breach is the auditor not adhering to the expected level of skill and care, and the loss is the financial damage the claimant suffers as a consequence.

These elements match the option listing duty of care existed, it was breached, and it caused loss to the claimant. The other statements miss the essential ideas: they mention agreements, performance for profit, timeliness, satisfaction, insurance, independence, a clean audit, or board approval—factors that do not by themselves establish the required duty, breach, and causal link to loss.

Agreement existed; It was performed; It generated profit.

The report was filed on time; The client was satisfied; The firm was insured.

The lead auditor was independent; The audit was clean; The board approved.