Auditors to get proportionate liability
Government ignores investor demands to withdraw proposals
Auditors look to have won their battle with investors over proportionate
liability, with the government expected to announce this week that legislation
to provide further protection will make it into the company law reform bill.
Parliament will receive an update on the progress of the bill this week,
although the final draft is unlikely to surface until after the summer recess.
The Financial Times reports that the Department of Trade and
Industry is to ignore pleas from investors to withdraw the proposals on
proportionate liability. Influential shareholder representatives withdrew their
support for limited liability earlier this year over growing concerns about the
quality of audit, in particular international standards on auditing.
The government will also stand firm with its plans to make it a criminal
offense to ‘knowingly or recklessly’ give an incorrect audit opinion.
Some auditors had argued that the proposals could result in jail sentences
for innocent auditors, but the DTI has argued that it would only affect those
guilty of serious wrongdoing.