EC Launches Forum On Limiting Auditor Liability

by Ulrika Lomas, for LawAndTax-News.com, Brussels

18 November 2005

The European Commission announced on Tuesday that it has set up a European Forum to gather market players’ views on limiting financial burdens for auditors.

The Forum will consider market-led solutions to mitigate litigation risks, and comprises twenty market experts from various professional backgrounds (such as auditors, bankers, investors, companies, insurers and academics) with particular experience and knowledge of the subject.

Internal Market Commissioner Charlie McCreevy explained that:

“No-one wants another corporate scandal that could reduce the Big Four to the Big Three - especially audit firms themselves, who we know want to limit their liability for acts under their direct responsibility. Now that some EU countries already have limitations or are moving in that direction, we think the time is ripe for EU-wide action. The forum’s market experts will help us to analyse all the issues.”

As part of the 8th Company Law Directive on statutory audit, the Commission intends to issue before the end of 2006 a report which will examine the impact of liability rules for carrying out statutory audits on European capital markets and insurance conditions. If appropriate, it will be followed by recommendations to Member States.

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