EC Publishes Responses To Consultation On Auditor Liability

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

21 June 2007

The European Commission has this week published a summary of 85 replies to the public consultation on the possible reform of auditors’ liability regimes in the EU, which was launched in January 2007.

The consultation was based on an independent study on the economic impact of current auditors' liability regimes and on insurance conditions in Member States.

Outlining the responses to the consultation, the EC announced that:

"The audit profession considers that there is a need for a Commission initiative on auditors' liability. Outside the audit profession, the majority of respondents from countries where limitation exists also support a Commission initiative on this issue, whereas the majority of the respondents from countries without limitation reject any Commission action."

"Regarding the different approaches to limiting auditors' liability proposed in the consultation paper, the audit profession prefers limitation based on capping, whereas the other respondents who support a Commission initiative would prefer a solution based on proportionate liability. Nevertheless, some respondents stress that if a Commission recommendation is adopted, it should give maximum flexibility to Member States in relation to the method of limitation at national level. Many respondents underline the need also to consider the principle of subsidiarity."

The Commission concluded:

"Choice in the audit market is recognised as an important issue that could jeopardise the efficiency of financial markets. However, not all respondents agree that limiting auditors' liability would be, by itself, an appropriate way to address the issue."

Recommended