Limiting Auditors´ Liability: The Sky Is No Longer The Limit

Firms of auditors around the country will be breathing a huge sigh of relief next month. From 6 April, under new rules introduced by the Companies Act 2006 ("Act"), auditors will be able to limit their liability for negligence, default, breach of duty or breach of trust, in relation to audit work carried out for their corporate clients. Whilst this is undoubtedly a policy decision on behalf of the Government, following intense lobbying by the accountancy profession, the outcome is a sensible one as the collapse of another major accountancy firm would have dire consequences for the financial services industry.

Conditions

Not surprisingly, auditors will need to jump through certain 'hoops' to ensure that their liability is limited. These are: