17-12-2007
FRC publishes guidance on auditor-company liability
Draft guidance has been published by the Financial Reporting Council (FRC) today on the use of agreements between firms and their auditors to limit the latter's liability.
Open for consultation, the publication intends to explain to all parties what is and what is not allowed under the Companies Act 2006.
It also aims to establish a number of factors that will be relevant when assessing cases for agreements.
Sir Anthony Colman, who introduced the draft guidance, said: "The law allows a degree of flexibility as to the manner in which liability can be limited and the form that agreements can take, and is intended to cover a wide range of circumstances."
This applies to private as well as public companies, while agreements must be approved by the company's shareholders, he added.
As the UK's independent regulator, the FRC has responsibilities for "promoting confidence in corporate reporting and governance", according to its website.