Legal Liability is Having a Chilling Effect on the Auditor's Role.

Key Points

• This study aims to understand how legal liability influences the effectiveness and reporting duties of auditors.
• Evaluation of management and auditor assessments of internal controls
• Analysis of direct reporting processes from auditors to regulators
• Examination of the relationship between auditors and interim financial information
• Legal liability significantly constrains auditor independence and effectiveness.
• Auditors face pressure to limit their reporting due to fear of legal repercussions.
• Increased liability may lead to more cautious evaluations of internal controls and financial information.