'True and fair' audit gets legislation, and prison penalty evaporates for reckless auditing
Auditors have, as expected, been granted the ability to limit their liability
to clients following the publishing of the company law reform bill.
The bill includes clauses that will enable auditors to negotiate
proportionate liability with their clients, despite initial objections from
investor groups. Investors will, however, get their wish that the true and fair
view of an audit be enshrined in legislation, after worries that IFRS and
international audit standards were eroding the value of the audit opinion.
Accountants will also be relived that the penalty for ‘knowingly or
recklessly’ giving an incorrect audit opinion will no longer carry a penalty of
prison. Instead auditors will face an unlimited fine.
Huntingdon Life Sciences, which has been without an auditor since Deloitte
resigned in 2003 after protests from animal rights activists, should also
finally be able to file accounts after the bill provided companies with the
option to hide the identity of the audit firm, should they feel they would be at