In general, an auditor's liability arises from the legal concept of privity, or a direct contractual relationship, and torts, or wrongful civil acts that result in injury to a person, property or reputation. Under tort law, an auditor may be liable to a customer for ordinary or gross negligence.

What are the two liabilities of an auditor?

Auditors are potentially liable for both criminal and civil offences. The former occur when individuals or organisations breach a government imposed law; in other words criminal law governs relationships between entities and the state.

What is audit of assets and liabilities?

It is the duty of Auditor to confirm that assets and liabilities are appearing in the balance sheet exhibiting their proper and correct value. In the absence of proper valuation of assets and liabilities, they will exhibit either overvalued or under-valued.