Millennium threat
Tighter insurance regulations will put year 2000 compliance inaccountancy's court.
Insurers have set their sights on forcing accountants to comply with strict new rules following fears that clients could sue professionals who fail to spot computer millennium problems (CMPs).
Insurance companies are currently drafting lists of questions accountants must ask clients to protect themselves from lawsuits if computers and other systems fail to handle the millennium date change.
Others are preparing to negotiate exclusion clauses with firms they insure to escape any liability in the year 2000.
Accountants offering IT consultancy services are the main target of the new rules, but due diligence specialists and even auditors could also be forced to rewrite their letters of engagement and the questions they ask clients.
Several Big Six firms are known to be re-examining their consultancy engagements over the last five years.
But any decision by insurers to become tough with auditors contradicts advice given to the English ICA’s audit faculty. Accountancy Age understands the audit faculty guidance document, due to be published shortly, says clients won’t be able to sue auditors if they fail to spot deficiencies in computer systems which later lead to a decline in the value of a company.
‘Professionals are going to be in the frame if they fail to spot things affecting the cost of the company,’ said Rosalind Jones, an insurance specialist at law firm Elborne Mitchell. ‘Accountants will be told what questions to ask by insurers if they want to retain their policy.’
Martyn Jones, head of technical audit at Deloitte & Touche, said he hoped the audit faculty guidance clearly explained auditors’ liabilities ‘and why we are not a substitute for a CMP review by the management’.
