An auditor audited the annual financial statements of ABC Plc. A third-party investor, relying solely on the audited accounts published in a national newspaper, purchased shares in ABC Plc and suffered severe financial loss when the company went into liquidation due to concealed liabilities. Under the Nigerian law of tort applying the principle in Caparo Industries Plc v. Dickman, the auditor is generally NOT liable to the third-party investor because:

Question

Accepted Answer

There was no proximity or special relationship, as the audit report was not prepared or addressed specifically for the individual investor's decision to purchase shares.. Under the landmark precedent of Caparo Industries Plc v. Dickman, which is authoritative in Nigerian tort law, auditors owe a duty of care to the company and its shareholders as a collective body, not to potential individual investors or third parties relying on general published accounts, unless a

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A) Auditors enjoy absolute immunity from tortious liability under the Companies and Allied Matters Act (CAMA) 2020.

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B) There was no proximity or special relationship, as the audit report was not prepared or addressed specifically for the individual investor's decision to purchase shares.

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C) Third-party investors are legally barred from recovering economic losses in Nigeria regardless of duty of care.

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D) The professional regulatory body, ICAN, has exclusive statutory jurisdiction to adjudicate and settle negligence claims against auditors.

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