OFT report 'misses the point' says law firm
Commercial law firm Reynolds Porter Chamberlain has claimed that the Office of Fair Trading report into auditor liability has misunderstood the risks to accounting firms.
The firm said that the OFT’s claim that it is not aware of evidence suggesting courts in the UK have made excessive damages awards against auditors has missed the point.
‘The really big claims do not actually make it to court as at some point along the way the defendant firm pays out a large sum, often unjustified, in order to buy themselves out of the risk inherent in going to trial,’ said RPC partner Jane Howard.
‘These out-of-court settlements can nevertheless damage the auditor’s reputation – on the no smoke without fire basis – and can send insurance premiums soaring even when there has benn no admission of liability,’ she added.