Deloitte Touche Tohmatsu chairman Piet Hoogendoorn warned over the weekend that exposure to lawsuits was forcing global accountancy firms to consider abandoning statutory audit work.
Our Dutch sister site AccountingWEB.nl reported that in his role as chairman of the Netherlands professional body NIVRA, Hoogendoorn voiced his concerns in an interview with the 'Het Financieele Dagblad' newspaper.
The big global firms were thinking about quitting the audit market because of the difficulty of getting professional indemnity cover. Insurers who were willing or able to provide cover could be counted on the fingers of one hand, he said.
The conditions that were being imposed on accountants were increasingly unattractive and policies contained more and more exclusions.
Hoogendoorn's comments provoked a surprised reaction, but should be viewed in the context of the situation in his native country. The two main professional bodies, NIVRA and NOVAA, both face being sidelined by government proposals to pass responsibility for audit regulation to a new state-backed body similar to the US Securities and Exchange Commission.
The Netherlands profession has also been rocked by allegations that auditors were deeply implicated in corrupt public sector tendering by a ring of construction companies and the recent announcement of around $500m worth of overstated profits at its biggest retail operator, Ahold.
As auditor of Ahold, Deloitte Touche Tohmatsu has already be slapped by a shareholders' class action suit.
Just as UK audit firms are lobbying heavily for auditors' liability to be restricted, some observers suggested that Hoogendoorn's warning was more about lobbying the Dutch government on the same issue than a serious threat to pull out of auditing.
Deloitte & Touche's UK office, headed by international assurance and advisory chairman John Connolly, said it would be “reluctant” to comment on what it saw as a local Netherlands issue.
