FDs divided over limited liability for auditors
Finance directors are split over whether the Government should reduce auditors’ liability by reforming the present laws of joint and several liability. The surprise finding follows an exclusive poll of 200 FDs for The Big Question, a new service commissioned by Accountancy Age and Reed Accountancy Personnel.
FDs were asked if changes to the existing system would weaken the protection afforded to their companies. But 40% said proportionate liability should not be introduced, compared with 39% who felt it should. Significantly, 21% said they had no strong feeling either way.
Alan Bond, FD of freight forwarding company AEI, commented: ‘Professional accountants have to run a business. Unlimited liability drives up their insurance risk management cost, which they pass on in higher audit fees.’
But John Hannigan, FD of Birmingham-based Accord Housing, said: ‘Companies need the ability to have recourse against partners who do not do their job.’ Another FD was more neutral: ‘Auditors are often seen as the soft target in litigation. I am not sure if proportionate liability will resolve this issue. It will merely protect one of the parties affected, the auditor.’
