Recent Key Cases On Accountants' Liabilities

Key points

• Documenting the scope of an accountant's engagement is as important as ever
• "Bannerman" disclaimers against third party liabilities in audit engagements have been upheld
• In non-audit engagements, the courts have been increasingly willing to enforce limitation of liability clauses
• Multi-tiered dispute resolution clauses in engagements may give accountants options to resolve a dispute before proceedings are commenced
• The debate over accountants being able to rely upon the "illegality" defence, when sued by the liquidator of a company previously run by fraudulent directors, continues.
• Accountants need to take steps now in their engagements to deal with the forthcoming Contract (Rights of Third Parties) Ordinance (Cap. 623)