Commission Recommendation of 5 June 2008 concerning the limitation of the civil liability of statutory auditors and audit firms (notified under document number C(2008) 2274) (Text with EEA relevance)
Date: 2008-06-05
Institutions: European Commission
Subjects: audit, auditing, civil liability, self-employed person

21.6.2008

EN

Official Journal of the European Union

L 162/39

COMMISSION RECOMMENDATION

of 5 June 2008

concerning the limitation of the civil liability of statutory auditors and audit firms

(notified under document number C(2008) 2274)

(Text with EEA relevance)

(2008/473/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
establishing the European
Community, and in particular Article 211, second indent,
thereof,

audits of listed companies should be limited. However,
any limitation on liability is not justified in cases of
intentional breach of professional duties on the part of
an auditor and should not apply in such cases. Nor
should such a limitation prejudice the right of any
injured party to be fairly compensated.

Whereas:

(1)

(2)

(3)

Directive 2006/43/EC of the European Parliament and of
the Council of 17 May 2006 on statutory audits of
annual accounts and consolidated accounts, amending
Council Directives 78/660/EEC and 83/349/EEC and
repealing Council Directive 84/253/EEC (1) establishes a
minimum harmonisation of statutory audit requirements.
Pursuant to Article 31 of that Directive, the Commission
is to report on the impact of the national liability rules
for the carrying out of statutory audits on European
capital markets and on the insurance conditions for
statutory auditors and audit firms and to make recom-
mendations if it considers it appropriate.

of

firms

functioning

capable of

capital markets

Smooth
requires
sustainable audit capacity and a competitive market for
audit services in which there is a sufficient choice of
conducting and willing to
audit
conduct statutory audits of companies the securities of
which are admitted to trading on a regulated market of a
Member State. However,
increasing volatility in market
capitalisation of companies has led to much higher
coverage
to insurance
access
liability risks, whilst
against
associated with such audits has
the
become increasingly limited.

risks

Since unlimited joint and several liability may deter audit
firms and networks from entering the international audit
market for listed companies in the Community, there is
little prospect of new audit networks emerging which are
in a position to conduct
such
companies.

statutory audits of

(5)

(6)

In view of
the considerable variations between civil
liability systems in the Member States, it is appropriate
at this stage that each Member State be able to choose
the method of limitation which it considers to be the
most suitable for its civil liability system.

Member States should accordingly be able to determine
under national law a cap in respect of auditors’ liability.
Alternatively Member States should be able to establish
under national
law a system of proportionate liability
according to which statutory auditors and audit firms
are liable only to the extent of their contribution to
the damage caused, without being jointly and severally
liable with other parties. In the Member States where any
claims against statutory auditors might be brought only
by the audited company and not by individual share-
holders or any other third parties, Member State should
also be able to allow the company, its shareholders and
the auditor to determine the limitation of the auditor’s
liability, subject to appropriate safeguards for investors in
the company audited,

HEREBY RECOMMENDS:

Subject matter

This Recommendation concerns

1.
liability of
auditors and audit firms carrying out a statutory audit of the
consolidated or annual accounts of a company which is
registered in a Member State and the securities of which are
admitted to trading on a regulated market in a Member State.

the civil

(4)

As a consequence,
firms,

the liability of auditors and audit
including group auditors, carrying out statutory

(1) OJ L 157, 9.6.2006, p. 87. Directive as amended by Directive

2008/30/EC (OJ L 81, 20.3.2008, p. 53).

Limitation of liability

2.
The civil liability of statutory auditors and of audit firms
arising from a breach of their professional duties should be
limited except in cases of intentional breach of duties by the
statutory auditor or the audit firm.

L 162/40

EN

Official Journal of the European Union

21.6.2008

The limitation of

the
3.
company audited and any third party entitled under national
law to bring a claim for compensation.

liability should apply against

Any limitation of civil liability should not prevent injured

4.
parties from being fairly compensated.

Methods for limiting liability

5. Member States should take measures to limit liability. For
that purpose, it is recommended that any one or more of the
following methods in particular be used:

(a) establishment of a maximum financial amount or of a
formula allowing for the calculation of such an amount;

(b) establishment of a set of principles by virtue of which a
statutory auditor or an audit firm is not liable beyond its
actual contribution to the loss suffered by a claimant and is
accordingly not
jointly and severally liable with other
wrongdoers;

(c) provision allowing any company to be audited and the
statutory auditor or audit firm to determine a limitation
of liability in an agreement.

6. Where liability is limited by agreement as referred to in
point 5(c), Member States should ensure that all the following
conditions are met:

(a)

the agreement is subject to judicial review;

(b) with regard to the company to be audited, the limitation is
decided collectively by the members of the administrative,
management
to in
supervisory bodies
Article 50b of Council Directive 78/660/EEC (1), or, in the
case of a group audit, in Article 36a of Council Directive
83/349/EEC (2), and such a decision is approved by the
shareholders of the company to be audited;

referred

and

(c)

the limitation and any modification thereof are published in
the notes to the accounts of the audited company.

implementing any of

the
7.
Before adopting measures
methods referred to in point 5(a),
(b) or (c), or any other
method limiting liability which complies with points 2, 3 and
4, a Member State should take into account the impact on
financial markets and investors and on conditions for access
to the market of statutory audit for listed companies, as well
as the impact on audit quality,
insurability of risks and the
companies to be audited.

Follow-up

8. Member States are invited to inform the Commission of
actions taken in light of this Recommendation by 5 June 2010.

Addressees

9.

This Recommendation is addressed to the Member States

Done at Brussels, 5 June 2008.

For the Commission

Charlie McCREEVY
Member of the Commission

(1) OJ L 222, 14.8.1978, p. 11. Directive as last amended by Directive
2006/46/EC of the European Parliament and of the Council
(OJ
L 224, 16.8.2006, p. 1).

(2) OJ L 193, 18.7.1983, p. 1. Directive as last amended by Directive

2006/99/EC (OJ L 363, 20.12.2006, p. 137).