PI insurers 'paying close attention' to auditors' LLAs
08/04/2008
Developments following the introduction of liability limitation agreements (LLAs) for auditors are to be watched closely by professional indemnity (PI) insurers, it has been claimed.
Legal practice CMS Cameron McKenna advises that PI providers are likely to be concerned with the first instances of such agreements appearing in court cases.
While the firm claims this is unlikely to occur for a number of years, it adds that "auditors and their PI insurers will be paying close attention to developments".
The permission for auditors to use LLAs to limit their liability was introduced on April 6th as part of the Companies Act 2006.
CMS Cameron McKenna suggests that firms whose auditors have not yet requested such an agreement should expect such an application to be made soon.
Meanwhile, the legal practice points to guidance from the Financial Reporting Council which highlights the reasons behind the introduction of LLAs for auditors.
The council previously identified an increasingly litigious society which presented auditors with an increase in claims which were more likely to result in costs beyond the individual means of the auditor.
PYV are one of the UK's leading providers of professional indemnity insurance. This news article has been produced by Adfero in collaboration with PYV and its unauthorised use is not permitted.
(c) 2008 Adfero Ltd.
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