Auditor’s liability towards third parties within the EU: A comparative study between the United Kingdom, the Netherlands, Germany and Belgium

Ingrid De Poorter


Auditors’ liability is a hot topic nowadays. Due to the increased risks of auditors
and the lack of appropriate insurance, a limitation of auditors’ 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 auditors’ 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 auditors’ liability regimes within the European Union. This paper shows that there are
large discrepancies concerning auditor’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 auditor’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 auditor’s liability toward those parties. This element wasn’t discussed in the London
Economics Study. However, these findings could have a major impact on the debate to harmonize
an auditor’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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