Commission recommendation on limiting audit firms' liability

06 June 2008

The Recommendation leaves it to Member States to decide on the appropriate method for limiting liability, and introduces a set of key principles to ensure that any limitation is fair for auditors, the audited companies, investors and other stakeholders.

The Recommendation leaves it to Member States to decide on the appropriate method for limiting liability, and introduces a set of key principles to ensure that any limitation is fair for auditors, the audited companies, investors and other stakeholders. It responds to the increasing trend of litigation and lack of sufficient insurance cover in this sector.

 

The Recommendation proposes three examples as possible methods but any other equivalent method might be used. The selected method should best suit the Member State's legal environment. It also introduces key principles to be followed by Member States when they select a limitation method:

 

- The limitation of liability should not apply in the case of intentional misconduct on the part of the auditor;

- A limitation would be inefficient if it does not also cover third parties;

- Damaged parties have the right to be fairly compensated.

 

Press release

Recommendation

Impact assessment and executive summary

FAQ

© European Commission