Jersey And Auditor Liability

EDM number 100 in 1996-97, proposed by Austin Mitchell on 30/10/1996.

That this House urges Her Majesty's Privy Council not to accept the Limited Liability Partnership Bill recently passed by the Jersey States, being dismayed by the protection which that law gives to bad auditors and failed audits, its reduction in rights of consumers of accounts to enhance the rights of a powerful vested interest and absolve them from the consequences of their own failure; is further concerned about the uncertainty and difficulties involved in exacting sanctions on firms auditing accounts in this country but incorporated under Jersey law rather than the British system of unlimited liability; condemns the haste and lack of consultation involved in the passage of the Jersey Bill, the attempt to gag and steamroller opposition in the States and the undesirable precedent created by allowing Price Waterhouse and Ernst & Young to buy and write their own DIY legislation for their own purpose and to protect their own interests, and suggests to audit firms that if they wish to limit liability they shoud incorporate as limited companies and give up the secrecy and tax advantages of partnership, and to Her Majesty's Government that the attempt by the big firms to bluff and bully their way to similar concessions here should be firmly resisted on the grounds that no limitation of liability can be considered in the United Kingdom until the whole audit industry is brought under effective independent regulation so that audit failure, auditor collusion, fraud and bad auditing are all dealt with in the only way possible: by improving the quality of audits.

This motion has been signed by a total of 81 MPs.