Whereas the L&H and Andersen incidents led to serious concerns about whether auditor
resources would continue to be available to indemnify investor losses, the situation differs for
KPMG and ComROAD。
Because auditor liability to investors is limited under German law,
despite the loss to ComROAD investors, the viability of KPMG Germany was arguably never in
serious question。
Moreover, even if KPMG were to suffer a similar fate as L&H and Andersen,
investors in their German clients arguably would retain the insurance coverage specified by
German law (see Section 2。
3。1)。 Because of this, the ComROAD / KPMG incident enables us to
abstract from the insurance rationale for audit quality and focus on the market reaction to events
that are, more so than for the L&H and Andersen incidents, damaging to an auditor’s reputation。
。