A study initialled by the Commission boosts the case of major accounting firms to gain more protection from ruinous damages claims, but dismisses an EU-wide one-size-fits-all approach.
Brief News:
The risk of ruinous law suits has been demonstrated with cases such as Arthur Andersen that collapsed in 2002 in the aftermath of the Enron scandal.
The study by London Economics argues, that a similar blow to one of the four dominant accounting firms (KPMG, Ernst & Young, PwC and Deloitte) could pose a threat to financial stability of the wider economy, creating “serious problems for companies whose financial statements need to be audited”. The study states that “one of the major Big Four networks could possibly fail” and that “a limitation on auditor liability would reduce risk caused by potential catastrophic claims.”
Internal Market and Services Commissioner Charlie McCreevy said: “The study highlights that large claims may put at risk an entire auditing network.” He added: “I recognise opinions are divided about how we should address these.”
See full Press Release.
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