PracticeAuditLiability cap hits delay

Liability cap hits delay

The drive by the accountancy profession to get a limit on the liability of auditors put into law has hit a setback after trade and industry secretary Patricia Hewitt admitted that much more work was needed before the Company Law bill could be put to parliament.

Link: Mid-tier firms break ranks on audit cap

Much of the previous work has now been split between two bills. The first, the Companies and Community Bill, will deal with the post Enron/Worldcom agenda and will strengthen powers to investigate companies, regulate auditors and for auditors to obtain information from company directors and employees among others.

Hewitt said that the bill ‘will be introduced as soon as parliamentary time permits’ and it is thought the bill will be mentioned in the Queen’s speech at the opening of the next session of parliament.

Auditor liability limits however will not be addressed by this bill and will have to wait for the second bill, which as yet has no time-scale as the government is looking at redrafting the whole of company law.

‘There are a number of options available to do with audit liability,’ said a DTI spokeswoman. ‘The first of which is whether to do something with it or not.’

Jim Cousins, Labour MP for Newcastle central and member Treasury select committee member, said that it was sensible to delay the issue of audit liability. ‘If the issues was addressed in the first bill it would arouse a great deal of parliamentary controversy,’ he added.

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