While the company law reform bill is still some way off becoming law, I can’t
envisage MPs making huge changes that would scupper auditors’ plans to negotiate
limited liability with their clients.
In fact, the bill as a whole gives auditors a good deal, and it seems that
even old adversaries – the investors – are now happy with the situation too.
Yes, there is still some grumbling over the clause that introduces a criminal
offence, but given the clear benefits that the bill will bring alongside the
removal of the jail threat for reckless auditing, auditors can’t be too unhappy
Now the liability argument will move on to the international stage. The Big
Four and the profession have been lobbying the European Commission to get an
EU-wide agreement on proportionate liability.
Limited liability in the UK will be irrelevant to these international
networks if things go pear-shaped somewhere else. So far, the murmurs coming out
of the commission have been favourable to auditors, but research may draw
Of course, the biggest issue when dealing with the EU is the length of time
it takes to get anything done. It could be years before firms get any additional
protection on the continent.
Paul Grant edits the audit page