11-03-2005, 06:59 PM
Your first line of defence is a "Good Engagement Letter". Consider adding a clause limiting auditors liability (usually fraction of total fees).
Next comes the documentation of audit work and use of scientific approach to audit work ranging from sampling to risk based audit management which could withstand the negligence claim in the court.
Today, the Govt. in UK is proposing a draft amendment to company law bill in the House of Commons and it also addresses the issue of limiting auditors liability. With the problems David Blunkett has created lets see where do we end up on this issue. I hope and pray it gets through with in this session of Commons.
Two case laws are important, Capro's case and the very famous BJM vs. Bank of scotland. In reaction to BJM case, ICAEW proposed new wording of the audit report some two years ago to limit the audit liablity. Whether their conceptual cover holds the test of court is another question.
Yesterday, claim for one billion pound against the Bank of England by the BCCI liquidator fell apart in the High Court. Detailed decision is being sought but its a must must read item on this issue.
Next comes the documentation of audit work and use of scientific approach to audit work ranging from sampling to risk based audit management which could withstand the negligence claim in the court.
Today, the Govt. in UK is proposing a draft amendment to company law bill in the House of Commons and it also addresses the issue of limiting auditors liability. With the problems David Blunkett has created lets see where do we end up on this issue. I hope and pray it gets through with in this session of Commons.
Two case laws are important, Capro's case and the very famous BJM vs. Bank of scotland. In reaction to BJM case, ICAEW proposed new wording of the audit report some two years ago to limit the audit liablity. Whether their conceptual cover holds the test of court is another question.
Yesterday, claim for one billion pound against the Bank of England by the BCCI liquidator fell apart in the High Court. Detailed decision is being sought but its a must must read item on this issue.
