Auditorâ€™s liability towards third parties within the EU: A comparative study between the United Kingdom, the Netherlands, Germany and Belgium
and the lack of appropriate insurance, a limitation of auditorsâ€™ liability seems appropriate. Based on
the economic study of the London Economics, the European Commission issued a consultation
paper to discuss a European harmonization of auditorsâ€™ liability. But to harmonize a liability cap on
auditors, one needs to examine not only the economic implications, but also the legal restraints and
differences of auditorsâ€™ liability regimes within the European Union. This paper shows that there are
large discrepancies concerning auditorâ€™s liability towards third parties within the legal systems of
the European Union. In Belgium, an auditor is liable towards each interested party. However, the
public role of an auditor is not acknowledged in the United Kingdom, the Netherlands and Germany.
In those countries the purpose of audited statements is to fulfil the auditorâ€™s duty to the shareholders
collectively and not to the stockholders as individual parties or third parties. In Germany, the
Netherlands and the United Kingdom, an auditor has to encompass a special duty of care towards
the third party to be liable. Only a special relationship of the auditor towards a third party could
imply auditorâ€™s liability toward those parties. This element wasnâ€™t discussed in the London
Economics Study. However, these findings could have a major impact on the debate to harmonize
an auditorâ€™s liability cap because the more parties can pursue an auditor, the more damage can be
claimed and the higher the liability cap needs to be fixed.
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JICLT is a member of the Directory of Open-Access Journals (www.doaj.org).Â ISSN: 1901-8401.