The law at the moment in relation to auditors' liability is in a state of confusion, inconsistent and perhaps less predictable than it ever was. The role of the auditor and to whom he owes his duties to is nebulous. The traditional view that has been held was that the auditor owed his primary and legal duty to shareholders in a corporation, yet over the past decade the public's perception of the auditor is that he owes his duties to other constituent' users outside the auditor-client nexus. The dissertation commences with an analysis of the U.K. case law with regards to the legal duty of care owed by auditors'. The role of the auditor is then viewed in relation to shareholders, potential investors and other third parties (creditors). Finally, the role of the auditor as an ‘insurer’ will be examined. In the final analysis it is submitted that a wider duty of care should be created in the area of tort law. Coupled with this are proposals for reform which may limit the liability exposure which is worrying the auditing profession at the moment because of the escalating claims made against them. The courts have to reform the law of negligence in relation to liability exposure made against auditors whilst on the other hand the courts need to define exactly to whom does he owe his duties.