EU contemplates audit liability constraint

The European Commission has tasked an expert panel with examining whether the European Union (EU) should draft legislation to limit the liability of auditors in the case of another huge accounting scandal, such as Parmalat. The European Forum on Auditors’ Liability will help the Commission study the issue next year, ahead of a policy report, which may be followed by formal guidelines to member states. EU internal market Commissioner Charlie McCreevy has signalled support for liability limits, saying: “No one wants another corporate scandal that could reduce the Big Four to the Big Three.” The forum will also help Brussels study alternative liability regimes and audit insurance. However, in the UK, the government recently said it would not limit the liability of auditors in large accounting scandals.