Press Release: Auditing: Commission issues Recommendation on limiting audit firms’ liability

The European Commission issued a Recommendation concerning the limitation of auditors' civil liability. Its main purpose was to encourage the growth of alternative audit firms in a competitive market. The Recommendation responds to the increasing trend of litigation and lack of sufficient insurance cover in this sector. It aimed to protect European capital markets by ensuring that audit firms remain available to carry out audits on companies listed in the EU. The Recommendation left it to Member States to decide on the appropriate method for limiting liability, and introduced a set of key principles to ensure that any limitation is fair for auditors, the audited companies, investors and other stakeholders. This initiative arose from a mandate in the 2006 Directive on Statutory Audit to examine the issue of limitation of financial liability and to present recommendations to Member States where appropriate.

European Commission: MEMO/08/366: Commission Recommendation on limitation of auditors' liability: Frequently asked questions http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/366&format=HTML&aged=0&language=EN&guiLanguage=en

---