More companies are disclosing agreements that prevent them from taking their auditors to court or from seeking punitive damages when problems arise with auditing work.
Such arrangements are the subject of a growing debate within accounting and regulatory circles. That's leading some companies to flag the issue when they send out proxy statements, notices issued to shareholders before annual meetings. Investors generally have been unaware of the provisions because they are contained in audit-engagement letters -- the paperwork for hiring an outside accountant -- that aren't made public.
Critics contend the agreements jeopardize the arm's-length relationship that companies are required to keep with their auditors. Some companies signing such agreements say they've felt pressured into doing so rather than risk being dumped by their auditors.
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