Link: Liability cap hits delay
The Department of Trade & Industry said it had ‘an open mind on whether action is necessary and is considering the strength of the profession’s case’, the FT reported.
Under current rules firms are jointly and severally liable, meaning they can be sued for full damages by plaintiffs even if they are not primarily responsible for alleged errors in financial reporting.
Following on from the collapse of Andersen, the result of the Enron fiasco, Ernst & Young is facing a restated £2.6bn negligence claim from its former audit client Equitable Life and many more firms are facing expensive damages claims.
However, the biggest mid-tier firms, are against the idea, and have written to the ICAEW claiming a cap on auditors’ liability would be a ‘second-class’ policy.
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Dr Richard Willis provides a several thousand-year history lesson of the profession, from origin to modern-day