Auditors in bid to limit personal liabilities

THE Institute of Chartered Accountants in Ireland (ICAI) has urged the Government to change the law to allow auditors to form companies and reduce their personal liability.

In its submission paper to the Company Law Review Group, which is seeking submissions on potential changes to auditor liability legislation, the ICAI said the personal assets of accountants are under threat if their firm is sued, even though they may not be involved in an audit of a failed firm.

Aidan Lambe, the ICAI’s technical director, said under the current law, litigators are drawn to hold auditors responsible for company difficulties beyond the level which the auditor may have contributed.

“This paper argues that even our largest audit firms are running an undue and uninsured risk when auditing large quoted or large hedge funds.

“We argue that given Ireland’s vital economic interest in foreign direct investment and the hedge fund industry in the IFSC, that should a failure occur it would have disastrous consequences for this country,” he said.

Mr Lambe said the ICAI are not looking for a complete exemption from being held responsible for misconduct but want to be relieved of the responsibility arising from the actions of others.