Few companies are expected to step forward to limit their auditors’ liability before the changes to the Companies Act 2006 come into force next month, when for the first time, companies can put in limited liability agreements.
‘It is a classic case of something that is needed in the interests of London as a financial centre. It is part of the plumbing that needs to be put in place, but it is not necessarily in any single company's interest to do it,’ John Griffith-Jones, head of KPMG, told the Financial Times.
When the Financial Reporting Council presents the responses to its consultation over some prototype legal clauses, the Big Four audit firms are hoping the regulator will return to another of its favourite issues such as easing their domination of the audit market to avoid huge lawsuits, which demolished the likes of Andersen in the wake of the Enron scandal.
‘It would help give individual companies the justification for saying “yes” to this when they're going to be asking, “what's in it for us?” Well, a greater chance of the Big Four and others being around,' Griffith-Jones said. ‘There is a feeling among some that we're all doing well enough without this, but it is classic safety legislation that needs to be there.’
Further reading:
Leader: Is the combined code made to be broken?
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