Auditing Report Questions On Lightning Ltd & Cardinal Ltd

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Question 2 (6 marks)

Based on the information provided by Tyrone in relation to Cardinal Ltd, and making reference to specific common law and/or auditing standards, prepare a report which addresses the following:

  • An outline of all the elements of the tort of negligence;
  • The case that Spruce Ltd could prepare in their efforts to sue JDM for negligence.
  • An assessment as to whether Spruce will be successful in their legal action
  • An explanation as to whether this assessment of success (as above) would change if Spruce had written to JDM telling them that they intended to buy Cardinal and were relying on the audited financial statements to assist them in making their decision.

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