" The decision in the Caparo case has led many informed commentators to believe that auditors have no liability to third parties for negligence, which has led to deterioration in the quality of audit work" (Note: the Caparo case is Caparo Industries plc v Dickman and others-UK house of Lords judgement)

You are required to discuss this statement and in particular:

(a)explain the decision in the Caparo case and state the parties who may successfully sue the auditor for negligence

(b)discuss the reasons why the Caparo judgement may lead to deterioration in the quality of auditors work

(c)describe the measures which have been introduced and the factors that have led to an increase in the independence of auditors and an improvement in the quality of their work.