Nikki is interested in investing in a listed mining company and requests a copy

Question

Nikki is interested in investing in a listed mining company and requests a copy of the last annual report of several mining companies. She finds that Toyo Mining Ltd is the best prospect. She is particularly impressed with the audit statement contained in the annual report. As a result Nikki acquires 5000 shares of Toyo at $10 per share. In 6 months the company the company is placed into Voluntary Administration. It now seems the audit was misleading indicating that the company was profitable when it was not. Can Nikki sue the auditors for any loss that she suffers as a result of a fall in the value of her shares?

Explanation / Answer

no she can not sue auditor.primary responsibility for the prevention and detection of fraud rests with the management.if auditor has obtained reasonable assurance about the true and fair financial statements he can not be held responsible for any fraud.

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