PracticeAuditClause aims to tackle audit liability limits

Clause aims to tackle audit liability limits

The government moves to prevent the Big Four agreeing limits to audit liabilities so high that they could exclude smaller firms

Attorney general Lord Goldsmith said ministers had reacted to the threat by
adding a new clause to the company law reform bill giving the trade secretary
power to make regulations about how limited liability agreements are expressed.

Speaking during a Lords debate on the bill, he said the clause had been
introduced to meet warnings from mid-tier firms that there was a risk of
liability limitations developing in a way that would damage competition in the
audit market.

He said ministers did not believe limited liability agreements would have
that effect but thought it prudent to take the power so as to be able to respond
to ‘any problems’.

Other amendments removed confusion over whether auditors would be forced to
negotiate a monetary cap, rather than proportionate liability. Trade minister
Margaret Hodge now has the job of seeing the companies bill through its final
stages and is expected to use it in part to address competition issues.

Baroness Noakes, a member of the Lords and a former ICAEW president,
described the latest moves as the government acting ‘in a positive and
constructive way’.

Related Articles

PwC replaces EY as Domino's auditor

Audit PwC replaces EY as Domino's auditor

1d 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