| Auditor’s liability towards third parties within the EU: A comparative study between the United Kingdom, the Netherlands, Germany and Belgium (2009) | |||||||||
Abstract | |||||||||
| Auditors’ liability is a hot topic nowadays. Due to the increased risks of auditorsand the lack of appropriate insurance, a limitation of auditors’ liability seems appropriate. Based onthe economic study of the London Economics, the European Commission issued a consultationpaper to discuss a European harmonization of auditors’ liability. But to harmonize a liability cap onauditors, one needs to examine not only the economic implications, but also the legal restraints anddifferences of auditors’ liability regimes within the European Union. This paper shows that there arelarge discrepancies concerning auditor’s liability towards third parties within the legal systems ofthe European Union. In Belgium, an auditor is liable towards each interested party. However, thepublic role of an auditor is not acknowledged in the United Kingdom, the Netherlands and Germany.In those countries the purpose of audited statements is to fulfil the auditor’s duty to the shareholderscollectively and not to the stockholders as individual parties or third parties. In Germany, theNetherlands and the United Kingdom, an auditor has to encompass a special duty of care towardsthe third party to be liable. Only a special relationship of the auditor towards a third party couldimply auditor’s liability toward those parties. This element wasn’t discussed in the LondonEconomics Study. However, these findings could have a major impact on the debate to harmonizean auditor’s liability cap because the more parties can pursue an auditor, the more damage can beclaimed and the higher the liability cap needs to be fixed. | |||||||||
Publication details | |||||||||
| |||||||||