Limitation of Liability of Public Auditors in Belgium

• Is there a limitation of liability for Auditors/Audit Firms in your country by law or if a limitation of liability needs to be agreed upon on a contractual basis between client and Auditor/Audit Firm? Does the answer to that question depends on the actual service provided by the Auditor/Audit Firm (Audit, Tax Consultancy, Advisory Services)?
• if the effectiveness of a limitation of liability (by law or on a contractual basis) depends on whether the Auditor/Audit Firm acted with simple resp. gross negligence or with intent?
• if the amount of the limitation of liability or its effectiveness depends on whether the client is listed on the stock exchange?

In answer to the first and third question, in Belgium, there is a limitation of liability for Auditors/Audit Firms by law, namely article 17 of the Belgian Law of 22 July 1953 creating an Institute of Company Auditors and organizing the public supervision of the profession of company auditor, consolidated on 30 April 2007. Here, it is stipulated that:

“The auditors are liable under civil law, for carrying out the assignments entrusted to them by or under the law. Except for violations committed with fraudulent intent or with the intention of causing injury, this liability is limited to a sum of three million euros for the exercise of any of these assignments to a person other than a listed company, increased to twelve million euros for the exercise of any of these assignments in a listed company. The King may change these amounts by a decision deliberated in the Council of Ministers.

The auditors are prohibited to withdraw themselves from this liability, even partially, by a special agreement.

It is lawful to cover their civil liability by an insurance policy approved by the Council of the Institute approved.

The provisions referred to in the first and second paragraph are also applicable to assignments by or under the law entrusted to the statutory auditor or, in the absence of a statutory auditor, to an auditor or an accountant, including the cases where these assignments are exercised by an accountant.”.

To answer the second part of the first question, in Belgium, the limitation of liability for Auditors/Audit firms indeed depends on the actual service provided by the Auditor/Audit Firm, because the aforementioned article stipulates that the limitation of liability of auditors is only applicable to the assignments entrusted to them by or under the law. This means that, for example, auditors that execute purely contractual assignments are fully civil liable if the liability limitation has not contractually been foreseen.

In answer to the second question, in Belgium, the effectiveness of a limitation of liability indeed depends on whether the Auditor/Audit Firm committed an offense with fraudulent intent or intent to harm, because in that case, following article 17 of the aforementioned law, the auditors are fully civil liable.

Finally, for more detailed information concerning this subject, the Foundation ICCI would like to refer to the Vademecum of our national Institute of Registered Auditors, i.e.: IRE, Vademecum Tome I: Doctrine, Antwerp, Editions Standaard, 2009, p. 469-476.