Liability spreads to Europe

Limited liability for auditors could become European law before the end of the year, after intensive lobbying by the profession found sympathetic ears in Brussels.

Link: McCreevy likens published accounts to ‘bikinis’

It had initially been thought that the eighth company law directive would pass through the European parliament too soon to allow auditor liability to be addressed, but representations from the ICAEW and the Big Four, among others, have seen recommendations for its inclusion emerge.

Rapporteur Bert Doorn advised: ‘This directive should require member states to take appropriate measures to limit the financial liability burden of auditors and audit firms.’

Three other rapporteurs also suggested amendments to the directive that would allow various forms of liability limitation, but the recommendations will not be put to the vote until 24 May.

Tony Bromell, head of accountancy markets at the ICAEW, added that the existing liability regimes across Europe ‘varied wildly’ and it would be sensible to establish some sort of framework.