PracticeAuditFirms urge action on liability flaw

Firms urge action on liability flaw

Auditors are concerned that the wording of companies bill could result in a monetary floor

Accounting firms are seeking yet more changes to the companies bill after the
surprise discovery that it could bring in a minimum level of liability for
auditors, instead of a cap.

DTI minister Lord Sainsbury moved to allay concerns during the second reading
of the CLR bill in the House of Lords last week, by saying that the legislation
would not necessarily result in the creation of a monetary cap.

This was despite the bill including a line that mentioned an ‘amount to which
the auditor’s liability is limited’, said Lord Sainsbury.

But sources have indicated that auditors are instead concerned that the
wording could result in a monetary floor, if the courts judge the amount stated
in the contract not to be fair and reasonable.

Peter Wyman, head of professional affairs at PricewaterhouseCoopers and
chairman of the ICAEW’s working party on the issue, said its legal advisers
believe that contracts would have to include a monetary limit. ‘The DTI does not
think our interpretation of the clause is correct,’ he said.

Wyman argued that the problem could be resolved with some ‘tiny’ amendments
to the clause, but this was unlikely to happen while a difference of opinion
remained.

A spokeswoman for the DTI said that the department was aware of the firms’
concerns, and added that its officials will continue to talk to the profession
‘with a view to reassuring them’.

Related Articles

PwC replaces EY as Domino's auditor

Audit PwC replaces EY as Domino's auditor

2d Alia Shoaib, Reporter
The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

Audit The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

1w Carl Johnson, Stephensons
BDO holds off Big Four to retain top position as AIM auditor

Audit BDO holds off Big Four to retain top position as AIM auditor

1w Alia Shoaib, Reporter
FRC urged to fine Big Four firms penalties over £10m

Audit FRC urged to fine Big Four firms penalties over £10m

3w Alia Shoaib, Reporter
EY to audit Standard Chartered bank

Audit EY to audit Standard Chartered bank

1m Alia Shoaib, Reporter
KPMG replaces PwC as Croda auditor

Accounting Firms KPMG replaces PwC as Croda auditor

2m Emma Smith, Managing Editor
EY fined £1.8m over Tech Data audit

Accounting Standards EY fined £1.8m over Tech Data audit

2m Emma Smith, Managing Editor
Top 50+50: Firms post significant growth in new tax and audit rankings

Audit Top 50+50: Firms post significant growth in new tax and audit rankings

2m Emma Smith, Managing Editor