Auditor liability

In December 2014, Cabinet approved the government response to the Law Commission’s report Liability of Multiple Defendants.

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Law Commission's report: Liability of Multiple Defendants

The Law Commission’s recommendations

The Government has accepted the Law Commission’s main recommendations to retain joint and several liability as the basis for determining liability where two or more civil defendants are held liable to a plaintiff for the same, indivisible damage (R1, R2, R8 and R12).

The Government has asked the Ministry of Business, Innovation and Employment to carry out further work before deciding whether to accept the Law Commission’s recommendations to cap auditors’ and audit firms’ liability when conducting large or complex audits in New Zealand (R13-R17).

Further work

MBIE will consider the regulatory impacts of the Law Commission’s proposals to cap auditors’ and audit firms’ liability. If it is concluded that liability caps should be introduced, then consideration will also be given to the detailed proposals contained in the Law Commission’s report.