Auditor's Negligence - Giving ‘information Only' Advice As A Professional

In the recent case of Assetco plc -v- Grant Thornton LLP [2020] EWCA Civ 1151, the Court of Appeal clarified the extent of losses for which an auditor was liable for a negligent failure to identify in its audit that a business was insolvent. The case addressed issues relating to the SAAMCO cap on losses where a professional has provided 'information only' advice in respect of a transaction.

Background facts

Assetco plc (Assetco) was the holding company of a group of business that provided various services related to fire and rescue. Its 2009 accounts (Accounts) audited by Grant Thornton, painted a picture of a healthy, expanding and profitable group of businesses, however, this was not the case. In fact, Assetco's chief financial officer and chief executive officer had acted dishonestly in the preparation the Accounts. This was common ground between the parties, and the Court of Appeal recognised that the individuals in question had 'duped Grant Thornton into