Criminal liability of auditors for financial statements

The term ‘auditor’ originates from the expression auditor, which in Latin, means ‘to listen’. Nonetheless, when scrutinising the duties and obligations of auditors, it reveals that they do not merely listen. They also examine and report to the company and its members, on its accounts. Moreover, the scope of these duties and obligations has increased in recent years. This is due to the changes in the corporate landscape. Hence, it is pertinent to determine auditors’ legal position in Malaysia under criminal law. The discussion will focus on the relationship between a company and its auditors. The study will then examine whether the legal principles under criminal law are able to address the scandals which have emerged in recent years pertaining to auditors. Essentially, the current legal framework under criminal law governing auditors must be reassessed in the wake of the scandals involving auditors both in the domestic and international forefront. The study will also investigate whether the legal principles under criminal law impose additional duties and obligations on auditors as opposed to those duties and obligations imposed under company law. Finally, the study will examine whether action can be brought against the auditors under criminal law and the difficulties faced in doing so. This is extremely crucial because the auditors' profession is becoming a high-risk profession. Therefore, principles of criminal law coupled with its intricate rules have to play its role effectively to ensure that the interests of all parties who have a stake in the matter i.e. stockholders and stakeholders are well- balanced with the role and duties expected of auditors contemporarily.