The common law and ISA 250
The Application of Common Law in Auditing under ISA 250 International Standards on Auditing (ISA) 250, “Consideration of Laws and Regulations in an Audit of Financial Statements,” mandates auditors to acknowledge the legal framework within which the auditing process operates. This standard highlights the necessity for auditors to consider laws and regulations that significantly affect the financial statements of an entity. Common law, as a fundamental aspect of many legal systems, plays a critical role in this context, especially in jurisdictions where it forms the basis of judicial decisions and statutory interpretations. ISA 250 requires auditors to consider laws and regulations when conducting audits. Common law affects this process in several ways: 1. Duty of Care: Under common law, auditors owe a duty of care to their clients and potentially to third parties, depending on the jurisdiction. This concept demands that auditors perform their duties with due diligence to avoid ne