A submission in May 2002 on "Setting the Agenda for Ethics" is contained in the following document: Ethics Standards Board.

A recurring problem in the UK is the lack of accountability of auditors to the shareholders in a company as legal judgements have generally only assigned a "duty of care" as being owed to the company itself. Auditors have also persistently worked to avoid direct personal liability by the formation of limited liability vehicles and by having caps on their liability. This came to a head in summer 2004 with threats by the large firms to stop auditing major banks unless they obtained some limitation on their liability as they argued that they could be bankrupted even though they might not be the major cause of any failure or distress in a company (auditors are often a target for law suits after wrong-doing in a company simply because they are seen to have "deep pockets" and may be the only persons left to sue). A good discussion on the issues involved here is the article written by Prem Sikka on the AABA web site at: http://visar.csustan.edu/aaba/audit26Aug2004.html .

One particular problem in UK company law is the "Caparo" Judgement where auditors were relieved of any direct responsibility to shareholders and other parties for the accuracy and completeness of their audits. Comments submitted to the DTI by UKSA as part of the Company Law Review process in 2005 are in the following letter: UKSA_Comments_Caparo. Some interesting comments on this subject were also submitted to the DTI in 2004 in a letter from Duncan Alexander which can be seen in the following document: Director&AuditorLiabilityDuncAlex (this is not official UKSA policy but is included here to show the views of an active investor). This issue was also covered in the UKSA submission on the Davies Review of Issuer Liability - see Issuer Liability.

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