Auditors' civil liability towards clients under the Jordanian law: Legal and auditing perspectives

Abstract

Since the emergence of the profession, auditors’ liability is recognized as a controversial and loose debating matter (Flores, 2011). This everlasting issue not only differs among contexts but also differ among the lawsuits. Consequently, as an essential step, this research endeavors to provide a full understanding of the extent and nature of auditors’ legal liability according to the Jordanian relevant regulations. To do so, the authors gain a full capture of the regulation through a qualitative-analytical study. Consequently, the authors found that in Jordan auditors are subject to different standards of proof before the judiciary. Therefore, judges in Jordan are bound to understand the peculiar technical-legal nature of auditors’ liability. Although the Jordanian regulations state clearly that an auditor is obliged to compensate for any realized damage or lost profit incurred as a result of errors committed by him/her, it must be borne in mind that lost profit is not recognized, and therefore, not entitled to compensation under the Jordanian Contract Law. In some cases, auditors’ liability might be increased to one of fitness for intended purposes, instead of reasonable care. Undoubtedly, this paper has serious legal implications in construing the wording of legal provisions and ensuing obligations and liabilities thereof.