PwC in UK changes audit wording to lower liability

LONDON, Dec 5 (Reuters) – PricewaterhouseCoopers on Thursday said it had changed wording on its audits to limit the reliance banks can place on its reports and so lower the accounting firms' possible liability for bad loans.

The move, likely to be copied by other big accounting firms, comes as auditors try to restore confidence in public accounts and protect their businesses from lawsuits after big corporate accounting scandals.

PwC's change was prompted by a Scottish legal case which appeared to allow banks to sue auditors of a bankrupt company to reclaim lost loans, PwC said.

PwC said it had received legal advice to include a disclaimer in its standard audit opinions, otherwise accountants could be underwriting the bad lending decisions of the banks.

In the case, Royal Bank of Scotland vs Bannerman Johnstone Maclay, a Glasgow-based auditor, the bank claimed it had relied on audited accounts when deciding to make a loan. The case has gone to appeal, PwC said.

PwC said its audit reports would now include the statement: “We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or in whose hands it may come save where expressly agreed by our prior consent in writing.”

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