<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The experience of the global financial crisis revealed that while many financial institutions were allowed to take excessive risks, the auditors failed in their duties to reasonably evaluate those risks as well as to inform the investing public about them. The issues of statutory auditors' liability and their public role are particularly relevant in Lithuania, considering the fact that over just the past few years the third and the fourth largest banks in Lithuania turned out to be insolvent. Analysis of legal actions against auditors of these banks highlighted certain shortcomings in the audit market and auditors' liability regulation, related to the quality and transparency of audit reports, auditors' accountability and independence requirements, and insurance of auditors’ liability.</p><p>In the first part of the paper the case analysis of Ernst &amp; Young Baltic’s responsibility for Snoras bankruptcy as well as Deloitte’s responsibility for Ūkio bankas’ insolvency, and discussion of the cases, are presented. The second part of the paper deals with the changes in regulation of the audit market in Lithuania and Europe, and issues left outside the reform.</p></abstract>

The experience of the global financial crisis revealed that while many financial institutions were allowed to take excessive risks, the auditors failed in their duties to reasonably evaluate those risks as well as to inform the investing public about them. The issues of statutory auditors' liability and their public role are particularly relevant in Lithuania, considering the fact that over just the past few years the third and the fourth largest banks in Lithuania turned out to be insolvent. Analysis of legal actions against auditors of these banks highlighted certain shortcomings in the audit market and auditors' liability regulation, related to the quality and transparency of audit reports, auditors' accountability and independence requirements, and insurance of auditors’ liability.In the first part of the paper the case analysis of Ernst & Young Baltic’s responsibility for Snoras bankruptcy as well as Deloitte’s responsibility for Ūkio bankas’ insolvency, and discussion of the cases, are presented. The second part of the paper deals with the changes in regulation of the audit market in Lithuania and Europe, and issues left outside the reform.

Are Auditors at Fault for the Collapse of Financial Institutions in Lithuania?

Baltic Journal of Law & Politics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Are Auditors at Fault for the Collapse of Financial Institutions in Lithuania?"}

The experience of the global financial crisis revealed that while many financial institutions were allowed to take excessive risks, the auditors failed in...

Are Auditors at Fault for the Collapse of Financial Institutions in Lithuania?

Pubblicato online: 04 mar 2017

Pagine: 171 - 197

Ricevuto: 03 ott 2016

Accettato: 23 dic 2016

DOI: https://doi.org/10.1515/bjlp-2016-0017

Parole chiave
Bankruptcy of banks, liability of auditors, regulation of audit market, insurance of auditors

© 2016 Julija Kiršienė et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Are Auditors at Fault for the Collapse of Financial Institutions in Lithuania?

Pubblicato online: 04 mar 2017

Pagine: 171 - 197

Ricevuto: 03 ott 2016

Accettato: 23 dic 2016

DOI: https://doi.org/10.1515/bjlp-2016-0017

Parole chiaveBankruptcy of banks, liability of auditors, regulation of audit market, insurance of auditors

© 2016 Julija Kiršienė et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Parole chiave
Bankruptcy of banks, liability of auditors, regulation of audit market, insurance of auditors