New Hampshire
How Ernst & Young v. J. Gordon McMurray applies in New Hampshire: state-specific rules, key cases, and bar exam notes for Corporate Law.
New Hampshire courts generally adopt a similar standard to that established in Ernest & Young v. J. Gordon McMurray, emphasizing the importance of professional duty and due diligence in the financial reporting context. The state recognizes the potential liability of auditors for negligent misrepresentation when they breach their duty to exercise reasonable care.
In New Hampshire, an auditor may be held liable for negligent misrepresentation to third parties who rely on their work if the auditor fails to meet the standard of care expected in the profession.
The court held that auditors could be liable for negligent misrepresentation when third parties reasonably relied on their financial statements amid evidence of auditing failures.
This case reiterated that auditors owe a duty of care not only to their clients but also to foreseeable third-party users of the financial reports.
The New Hampshire Supreme Court affirmed liability for auditors who knowingly or recklessly provided misleading financial statements.
New Hampshire’s approach mirrors federal standards under the Securities Exchange Act, where auditors face liability for misleading statements and omissions. However, New Hampshire's courts may emphasize state-specific interpretations of third-party reliance more rigorously than some federal courts do.
Understanding the application of professional negligence in auditing contexts, particularly in cases like Ernst & Young v. J. Gordon McMurray, is pivotal for the New Hampshire bar exam, especially in the Corporate Law section.