FTSE 100 and auditors in liability stand-off
FTSE 100 set to reject liability cap after 'red top' threat
FTSE 100 set to reject liability cap after 'red top' threat
The UK’s top companies are preparing to reject liability caps proposed by
auditors.
Lawyers this week told Accountancy Age that firms are unlikely to
get FTSE 100 companies to sign agreements to fix a cap for their liabilities,
after investors said they would issue ‘red-top’ warnings on any companies who
did.
‘The lower end of listed companies may quite easily accept that, but the
heads of audit at the firms are getting the impression that top companies will
definitely not go for caps,’ a City solicitor said.
A new regime for limiting auditor liability was introduced in the Companies
Act and comes into force in April 2008. But there have already been fledgling
negotiations – at times denied by the firms – about how the arrangements might
work in practice. The discussions are heading for ‘proportionality’ arrangements
rather than fixed caps.
In other practice areas, firms arrange for a cap of a multiple of fees to be
outlined in contracts. Such a move might typically have seen top companies cap
the liabilities at as little as £500m, ten times the highest audit fees.
The Association of British Insurers said that it would issue ‘red top’
warnings Ð its strictest admonishment on corporate governance Ð to any companies
that arranged for a fixed cap.
The numbers you crunch tell a story. Your expertis...
17yEmbracing user-friendly AP systems can turn the tide, streamlining workflows, enhancing compliance, and opening doors to early payment discounts. Read...
View articleOrganisations can enhance their financial operations' efficiency, accuracy, and responsiveness by adopting platforms that offer them self-service cust...
View articleIn a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...
View resourceDiscover how AP dashboards can transform your business by enhancing efficiency and accuracy in tracking key metrics, as revealed by the latest insight...
View articleThe Bank of England has appointed Ernst and Young LLP (EY) as its external auditor from the financial year ending 28 February 2025. Read More...
View articleThis follows an investigation into undisclosed personal loans and issues with an acquisition. Despite challenges, the company aims to achieve £1bn in ...
View articlePwC's decision to delay promotions in its graduate scheme, affecting around 100 graduates, is a response to reduced client demand and the aftermath of...
View articleTraditionally, audit schedules have been prepared manually, consuming significant time and resources. However, with the advancements in Artificial Int...
View articleThe FRC is promoting initiatives to foster a more competitive market, following recent high-profile accounting scandals. Read More...
View articleOn January 27, it was reported EY had quit as auditor to Asda amid one of its senior partners starting a romantic relationship with billionaire chief ...
View articleDespite the increased interest in AI and ML, only 12% of respondents indicate their organisations have adopted AI and ML within their audit functions....
View articleAs the government's independent investigation progresses, it is hoped that a clearer picture will emerge, leading to meaningful reforms within the aud...
View article