PracticeAuditFRC appoints liability working group

FRC appoints liability working group

Working group's conclusions will be open to public consultation later this year, says FRC

The UK regulator has announced a working group to prepare guidance on auditor
liability agreements.

This follows requests from the profession, who felt more clarity was needed
on the liability provisions within the Companies Act 2006, which now allows
auditors to negotiate with companies whose accounts they are auditing

The group, chaired by former Commercial Court Judge, Sir Anthony Colman, has
been tasked with producing draft guidance for public consultation later this
year.

The draft guidance will address the form such agreements would take, and the
process by which they would be agreed, but will not seek to define what a ‘fair
and reasonable’ amount would be.

FRC chief executive Paul Boyle said: ‘Earlier this year the FRC was
approached by the accountancy profession and asked whether it would be willing
to prepare guidance on the use of these liability limitation agreements.

‘We agreed to do so only if the proposal was also acceptable to the corporate
and investment communities and that remains the basis on which we will proceed.
The FRC will only give its endorsement to guidance that enjoys broad support
from all market participants.’

The members of the working group are:

  • Sir Anthony Colman (chairman)
  • Richard Bint, head of professional services, PKF (UK) LLP
  • Neil Brown, head of governance and responsible investment, Threadneedle
    Asset Management Ltd
  • Lisa Cameron, general counsel, Ernst & Young
  • Vanessa Knapp OBE, partner, Freshfields Bruckhaus Deringer
  • Paul Lee, director, Hermes Equity Ownership Service
  • Rosemary Martin, general counsel, Reuters Group PLC & Vice-Chair GC 100
    Group
  • Peter Smith, chairman, Savills plc
  • Chris Hodge, Financial Reporting Council (secretary)

Observers:

  • Richard Fleck, chairman, Auditing Practices Board, Financial Reporting
    Council
  • Richard Leyland, director, Corporate Law and Governance Directorate,
    Department for Business, Enterprise & Regulatory Reform

Further reading:

FTSE giants confirm audit liability
cap discussions

Audit liability: will one size fit
all?

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