Is an auditor liable for negligence of omission or negligence of commission?

The negligence here is negligence of omission rather than negligence of commission. In most of the cases of negligence of omission involving auditors there appears to be great difficulty in determining the auditor’s liability, but under all the authoritative decisions since Hadley v. Baxendale (1854) 9 Ex. 341, 23 L.J. Ex. 179, with the numerous qualifications of the rule in that case, it seems to be clear that liability for negligence follows closely on the principle stated in that decision. When the defendants neglected their duty in not probing the possible circumstances of kiting they must be taken to have known that if any employee had been guilty of kiting he would not be dismissed from his employment because they, the defendants, had not reported what they suspected, and it follows it seems to me quite logically that they should know that that employee would continue his kiting, and also as auditors they should know that kiting on the part of an employee certainly meant the covering up of thefts.