Bank regulators are mulling a proposal that is touching off a new era of debate over whether there should be liability limits for auditors when an audit fails to turn up flawed or fraudulent accounting.
A group of bank regulators have compared notes and discovered audit firms are increasingly seeking provisions via engagement letters that would limit auditors’ liability. The group issued a proposed advisory that would warn financial institutions to reject any such provisions when entering into an agreement for an external audit. The group has collected comments on the proposed advisory and is analyzing remarks.
