Citation, commencement and interpretation

1. —(1) These Regulations may be cited as the Local Audit (Liability Limitation Agreements) Regulations 2014 and come into force on 1st April 2015.

(2) In these Regulations “the Act” means the Local Audit and Accountability Act 2014 and a “liability limitation agreement” means an agreement to which section 14 of the Act applies.

Duration of liability limitation agreements

2. —(1) A liability limitation agreement must not contain provisions which make the duration of the agreement longer than the financial year or years in relation to which the appointment of the local auditor applies.

(2) A liability limitation agreement is effective only to the extent that it complies with this regulation.

Restrictions on amount of liability limited

3. —(1) A local auditor’s liability may be limited by a liability limitation agreement to such amount as is fair and reasonable in all the circumstances of the case, having regard (in particular) to—

(a) the local auditor’s responsibilities under the Act,

(b) the nature and purpose of the local auditor’s contractual obligations to the authority, and

(c) the professional standards expected of the local auditor.

(2) In determining what is fair and reasonable in all the circumstances of the case no account is to be taken of—

(a) matters arising after the loss or damage in question has been incurred, or

(b) matters (whenever arising) affecting the possibility of recovering compensation from other persons liable in respect of the same loss or damage.

(3) A liability limitation agreement is effective only to the extent that it complies with this regulation.

(4) In the circumstances where a liability limitation agreement purports to limit the amount of the local auditor’s liability, a provision of a liability limitation agreement that does not comply with paragraph (1) is to have effect as if it complied with paragraph (1).