Suggestions from the accounting regulator that firms could lower their audit fees in exchange for clients agreeing to limit their liability have been shot down by the profession.

Ideas of potentially lower fees were contained in guidance published by the Financial Reporting Council last week.

FRC chief executive Paul Boyle said: ‘Firms say the reason audits are so expensive is because of the premium for risk. Investors will say now that liability is limited, risk is lower, so presumably the price can come down.’

But the firms argue that this is not the case. PricewaterhouseCoopers’ global head of regulatory policy Peter Wyman, said that the legal responsibility of the firms is not reduced so neither could the fees be reduced.

‘We have always said proportionality might save us from catastrophe, but it is certainly not going to reduce the cost of normal claims from management. We’ve accepted that we will remain responsible for our own mistakes. We’ve never priced catastrophe into our costing.

‘So an LLA that gives proportionality has no impact on our costs and therefore will not have an impact on our fees,’ said Wyman.

Jan Babiak, managing partner of Ernst & Young’s regulatory and public policy affairs said: ‘Our audit fee rates have never included a premium for risk and we have no plans to do so. In our view, it is unlikely that the market response to LLAs will be a reduction in audit fees.’

Grant Thornton’s Steve Maslin said the lower fee idea emerged following arguments that costs could rise to cover higher risk: ‘Liability is about whether we’re going to avoid another Andersen-like collapse over an isolated audit. Fees are not relevant to the question of liability,’ Maslin said.