PracticeAudit‘Bank auditors need greater protection’

'Bank auditors need greater protection'

Any increase in auditors’ responsibility should happen alongside reform of UK liability protection for audit firms says KPMG UK audit chief

Any increase in the responsibility for the auditors of banks should be
accompanied by a reform of limited liability rules to give firms better
protection from legal action over company failures, KPMG’s UK head of audit has
said.

Some experts have called for auditors to give more assurance about their
clients’ assessment of business risks. However, a Treasury committee report into
the banking crisis published last week said it was not convinced that auditors
should take on this responsibility.

Oliver Tant of KPMG
told Accountancy Age that any increase in auditors’ responsibility
should happen alongside reform of UK liability protection for audit firms. He
said an expansion of auditors’ responsibility when signing off accounts would
‘inevitably’ make firms vulnerable to more litigation.

Currently, an auditor can be sued for all losses when a company collapses,
even if they were judged to be only partly to blame.

Representatives from the Big Four firms met the Department for Business
Enterprise and Regulatory Reform to discuss their concerns. One option is to
limit liability to the proportion of their client’s loss which they are
responsible for.

The committee report also said banks’ financial reports were too complex and
too long.

Richard Sexton, head of assurance at PwC, said: ‘The key is to get all
relevant parties round the table to decide what should be covered by [financial]
reporting. Our skills are transferable.’

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