Auditor liability cap called for once again

The European Union's Internal Markets commissioner, Charlie McCreevy has once again called for a cap on auditor liability, to guard against another collapse of a Big Four firm.

McCreevy was commenting during a Financial Times interview, on mounting concern in the industry over the ripple effects in the business community in the event of a four becoming three.

'The market is restricted to the Big Four firms. There were six not so long ago,' he said.

Six firms were reduced to five in 1998 after Pricewaterhouse and Coppers & Lybrand merged. Then the Anderson network dissolved following shocking revelations at Enron in 2002.

Since then, the Big Four have consistently called on government to introduce limits as to the extent for which an auditor may be liable, especially as auditor liability insurance has sharply declined.

McCreevy's office is due to issue a policy paper on auditor liability by the end of the year.

Further reading:

EU probes audit competition

Big Four gains support on liability argument

EC study favours auditor liability cap