PracticeAuditCity chief joins liability row

City chief joins liability row

Influential City accountant, Michael Snyder of Kingston Smith, adds to criticisms of auditor liability rules

Michael Snyder, Kingston Smith

Snyder, senior partner of Kingston Smith and currently chairman of the policy and resources committee at the City of London corporation

The government is coming under increasing pressure to look at auditor
liability again, as the profession turns on the arrangements introduced in the
Companies Act.

Michael Snyder, senior partner of
Kingston
Smith
and one of the most influential accountants in the City, has added to
criticisms of the rules, which have introduced negotiated liability arrangements
between auditors and their clients.

Snyder is currently chairman of the policy and resources committee at the
City of London corporation, a position he relinquishes today.

‘The government has given an enabling position for [proportionate liability]
to be individually organised between auditor and auditee. Frankly this was never
going to be as satisfactory as doing it structurally and by law,’ he said.

Snyder’s comments follow suggestions by
Baker Tilly’s
Lawrence Longe that the government might have to legislate again following an
impasse on the issue.

The growing pressure may not mean immediate action however, given the long
time-frames for introducing company legislation. Clients are reluctant to sign
up to limit their auditors’ liability, meaning negotiated arrangements are not
proving practical. The Financial Reporting Council is producing guidance on the
issue, but it is only in draft form.

PricewaterhouseCoopers
partner Peter Wyman said suggestions of revisiting the issue were ‘premature’.

‘We need to see how things pan out over the next six months to a year before
thinking of government legislation or to get anything happening.’

A spokesman for the
Department of Business,
Enterprise and Regulatory Reform
said the department had not received any
requests to revisit the regime for limited liability contracts: ‘We will be
reviewing the Act [Companies Act 2006] overall in due course when there’s more
experience of it operating in practice.’

An FRC spokesman denied
blue chip companies were opposed to the agreements: ‘The majority of responses
indicate there will not be a fight over proportionality and it will be
accepted.’

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