DAC Beachcroft's Accountancy Newsletter features topical issues for our clients and contacts
Round up of FRC activity in 2023
It has been a turbulent time for the audit industry, and this industry – perhaps above all others – is one where the regulator sets the tone. Our article reflects back on the FRC's activity in 2023 to see what themes can be drawn out.
The Court of Appeal clarifies legal advice privilege in investigations and litigation privilege for non-parties
The recent Court of Appeal decision in Al Sadeq v Dechert LLP provides helpful clarification on the scope of legal professional privilege. In particular, it confirms litigation privilege is not confined to parties to the litigation and legal advice privilege can apply in an investigatory context if lawyers are instructed to provide legal expertise in the context of the investigation and the investigation itself is conducted in a legal context. We consider the implications of this judgment for accountancy firms facing possible or actual investigation by their regulator and the steps they can take to ensure privilege is maintained.
Climate risks, financial statements and auditors – where are we heading?
With the FRC, NGOs and other organisations scrutinising the TCFD aligned disclosures, climate risks need to be properly accounted for in financial statements and auditors need to ensure any material impacts of climate change are properly reflected in financial statements. Our article provides some practical tips to auditors on how to manage the evolving risks in this space.
Restrictions in T&Cs may not be enough to avoid liability to third parties
The recent Amathus Drinks decision illustrates the potential limitations of Bannerman clauses and that there may be certain circumstances in which a professional adviser will owe a duty of care notwithstanding the inclusion of an express disclaimer clause in its retainer.
FRC / Carillion – the high-water mark, or a taste of things to come?
The FRC's investigations into the audits of Carillion resulted in eye-watering fines being handed out. Will the FRC's new Executive Counsel, Richard Moriarty, bring in a change in emphasis away from ever harsher sanctions, and towards alternative routes on driving up audit quality? Please read our article for more details.
Courts can compel parties to use Alternative Dispute Resolution
In a landmark decision, James Churchill v Merthyr Tydfil County Borough Council, the Court of Appeal has ruled that the courts can stay proceedings and order parties to engage in Alternative Dispute Resolution (ADR), even where one or both parties have expressed an unwillingness to engage in the process. We consider the implications of this decision for professional advisers, such as accountants and auditors, who find themselves defending allegations of negligence, and consider how the judgment may help them achieve an early resolution of the dispute.
Supreme Court clarifies the meaning of deliberate concealment for limitation purposes
The Supreme Court in Canada Square Operations Ltd v Potter has clarified what is meant by the phrases “deliberately concealed” and “deliberate commission of a breach of duty” in the context of section 32 of the Limitation Act 1980. The decision, which marks a return to giving the words used in s32 of Limitation Act 1980 their ordinary meaning, will be welcomed by professionals advisors such as accountants, and their insurers.
