Ernst & Young, the big accountancy firm, escaped potentially expensive legal liability for negligent audit work done at ERF, the British truckmaker, when appeal judges upheld an earlier high court decision.
But, while the ruling came as a relief for the "Big Four" accountancy firms, lawyers said its broader implications for accountants were less favourable.
In particular, comments by one of the appeal court judges - and endorsed by the other two - could mean they will face greater legal risks when auditing a subsidiary business that they know is probably going to be sold by its parent company.
"Auditors will have to take particular care with regard to their liability position when auditing a subsidiary which they know is likely to be sold," said Richard Swallow of the Slaughter & May law firm.
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