Ojo, Marianne (2008): PROPOSALS FOR A NEW AUDIT LIABILITY REGIME IN EUROPE.
Download (42Kb) | Preview
The past few years have seen a growing trend towards the focus on audit liability. In the UK, the Company Law Reform Bill which became the Companies Act 2006, has removed the previously existing limits on auditor liability and compelled an agreement between the company and the auditor. As well as the UK, audit liability caps also currently exist in Austria, Belgium, Germany, Greece and Slovenia. This paper addresses the four options presented by the European Commission in the reform of the audit liability regime in Europe. It also responds to the proposals put forward by Doralt and others in their response to the European Commission’s four options. The paper commences with a background to how increased audit concentration has contributed to increased audit liability measures. It then discusses the significance of the Companies Act 2006, following the leading case of Caparo Industries plc v Dickman and Others. The four options presented by the European Commission for reforming auditors’ liability regime are then introduced. In arriving at a preferred choice, the need for a consideration of harmonisation and facilitating greater cooperation between national financial regulators, were contributory factors.
|Item Type:||MPRA Paper|
|Original Title:||PROPOSALS FOR A NEW AUDIT LIABILITY REGIME IN EUROPE|
|Subjects:||K - Law and Economics > K2 - Regulation and Business Law
M - Business Administration and Business Economics; Marketing; Accounting > M4 - Accounting and Auditing > M42 - Auditing
|Depositing User:||Dr Marianne Ojo|
|Date Deposited:||20. Aug 2008 02:54|
|Last Modified:||18. Feb 2013 01:16|
Barings Plc v Coopers and Lybrand  1 BCLC 427.Westlaw UK.<http://login.westlaw.co.uk>
Caparo v Dickman (1990) 1 All ER HL 568.Westlaw UK. <http://login.westlaw.co.uk>
Companies Act 1985,Westlaw UK.<http://login.westlaw.co.uk>
Cunningham, L. 2006. Too Big to Fail: Moral Hazard in Auditing and the Need to Restructure the Industry Before it Unravels. Boston College Law School Faculty Papers pp 36-38.
Doralt W, Hellgardt A, Hopt KJ, Leyens PC, Roth M and Zimmermann R. 2008. Auditors’ Liability and Its Impact On The European Financial Markets.Cambridge Law Journal 67:62-64
Explanatory Memorandum to the Companies Act 1985.Westlaw UK. <http://login.westlaw.co.uk>
Fourth Council Directive of 25 July 1978 (78/660/EEC).Westlaw UK. <http://login.westlaw.co.uk>
Gietzmann MB and Sen PK. 2002. Improving Auditor Independence Through Selective Mandatory Rotation. International Journal of Auditing 6: 201.
House of Commons Select Treasury Committee. 2001/2002. Further Memorandum Submitted by Professor Prem Sikka - The Institutionalisation of Audit Failures: Some Observations' p 21.
LaCroix,K. 2007. Looking at Auditor Liability Caps The European Federation of Accountants_ Federation des Experts Comptables Europeens.<http://www.fee.be>