ICAI Welcomes McCreevy Remarks On Limiting Auditor Liability

by Carla Johnson, Investors Offshore.com, London

20 December 2007

The Institute of Chartered Accountants in Ireland (ICAI) has responded positively to the statement from Internal Market Commissioner, Charlie McCreevy, that he will recommend to EU Member States that they take measures to limit auditor liability.

The Minister’s remarks were made in a wide ranging speech on statutory audit issues to the legal affairs committee of the European Parliament.

Commenting, ICAI Director of Technical Policy, Aidan Lambe, announced that:

“This is a welcome move by the Commissioner and follows an extensive consultation process following the publication of a study by economic consultants. The Commission has identified the unlimited nature of auditor liability as posing a threat to the audit market because it inhibited large firms’ capacity to insure against this risk and has acted as an impediment to greater competition in the audit market. In an Irish context, public policy would not be served by a catastrophic claim that results in the loss of a major audit firm."

He continued:

"In Ireland, the Government has already recognised the import of this issue has asked the Company Law Review Group to examine appropriate measures in this regard. The announcement by the Commissioner today that he will issue a formal recommendation to Member States should add further impetus to that work."

"Of further significance are the Commissioner’s remarks on implementation of the Statutory Audit Directive. His warning on the need to avoid so called ‘gold plating’ measures because of the barriers such measures pose for choice and competition is a welcome reminder to legislators. It should be noted that Ireland has already addressed many of the oversight issues referred to by the Commissioner and is well placed to implement the Directive."

"ICAI will be studying the Commissioner’s comments in further detail and considering what further response is needed."

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