Use of the word negligence

The term “negligence” is used very often out of its context and this may have negative impacts on your findings. The term “negligence” on its own does not have any meaning other than its simply implies that an act has taken place. Negligence is used in general language to mean someone was unreasonably lax in fulfilling some obligation. Examples are - A restaurant owner who mops the slippery floor and doesn't put up a "Wet Floor" sign could be considered negligent or an auditor who accepts an auditing engagement knowing he/she does not have the expertise. In each of these situations, a plaintiff could file a lawsuit and obtain compensation if he or she can prove the negligence was the direct cause of some type of harm they endured.

Emphasis is on the word “compensation”. Without the term “compensation” negligence has no real force and effect. One is only “negligent” when one has lost a civil case and monetary damages have been paid over. 

One cannot say that someone was negligent because it is believed that person behaved in manner that is not acceptable, like not complying with auditing standards. Not complying with auditing standards is not negligence per se but a possible breach of a statutory duty which results from a negligent act. However, that does not mean one is negligent as no one has suffered actual damages as a result of a court case etc. 

When one says a person is negligent; what is implied that such a person if ever sued would have to pay damages. Its, an assumption that if an auditor or a director is negligent they have acted in way that would attract liability.

If an employee is negligent they have acted in a manner that places the company at risk and the company would suffer damages.