Audit quality body backs US liability limits

The push for auditor liability limitation in the US received a boost today when an influential audit group threw its weight behind the movement.

The Centre for Audit Quality, an autonomous organization which is aimed at serving investors, auditors and the capital markets by improving audit quality, has urged the US Treasury to consider setting a cap or introduce proportionate liability to reduce the risk of the collapse of another firm through litigation

In a letter sent to the Treasury last week, the CAQ said that the six biggest audit firms had faced 90 lawsuits with claims from $100m (£50m) to $10bn (£5bn).

'It could take only one or two cases where settlement is not reached to threaten a firm's existence,' wrote CAQ executive director Cynthia Fornelli, according to CFO.com.

She also suggested the appeals bonds be capped to make it easier for audit firms to appeal cases with large damages and for a way to be found for large firms to obtain liability insurance.

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Will the US say yes?