The European Commission is to set up a special forum to gather market players' views on limiting auditors' liability
It has drawn together 20 market experts from various professional backgrounds, including auditors, bankers, investors, companies, insurers and academics. The forum will consider ways of mitigating litigation risks.
Internal Market Commissioner Charlie McCreevy said: "No-one wants another corporate scandal that could reduce the 'big four' to the 'big three' ' especially audit firms themselves, who we know want to limit their liability for acts under their direct responsibility.
"Now that some EU countries already have limitations, or are moving in that direction, we think the time is ripe for EU-wide action. The forum's market experts will help us to analyse all the issues."
One of the forum's first tasks will be to provide the data for the Commission's planned study on the economic impact of alternative liability regimes, competition in the market and the availability of insurance.
The study will form the background to a report the Commission plans to issues before the end of 2006 into the impact of liability rules for carrying out statutory audits on European capital markets and insurance conditions. This report is part of the eighth Company Law Directive on statutory audit and may be followed by recommendations to member states.
Members of the forum are appointed until 31 December 2006. For further information on auditing in the EU click here