Institutes attacked by investors

Link: Audit cap may sneak into companies bill

It emerged this week that Morley Fund Management, one of the biggest funds in the UK, is planning to counter arguments from the profession by demanding changes to the legal framework surrounding auditors and the beefing up of audit standards before a limit to liability is introduced.

Accountancy Age has learned that several other investment bodies ? including the National Association of Pension Funds, the Pensions Investment Research Consultants, the Association of British Insurers and fund manager Hermes ? could take similar action before the consultation period on a cap closes on 12 March.

It is understood that investors will question the need for urgency in reviewing auditor liability amid fears the profession is attempting to ‘hijack the debate’.

‘We are not comfortable with the accounting profession?s attempts to railroad the debate on auditor liability,’ said Iain Richards, head of governance at Morley, which is responsible for nearly £97bn of assets in the UK. ‘Any change needs to be in context and appropriate.’

Richards argued that changing the liability for auditors by itself was not acceptable within an industry that had already done a lot to reduce its exposure. Among other issues, he said the breadth of audit reports and auditors’ accountability needed to be addressed. ‘The profession will change nothing that affects its economic interests,’ he added.

These concerns have been shared by Peter Montagnon, head of investment affairs at the ABI. ?The general feeling is that people are wary of capping liability,? he said.

Peter Wyman, former ICAEW president, said: ‘The debate the investors want, we also want, but there is an urgent need for liability reform and the opportunity to get it in the companies bill. There is not enough time for a wider debate for this bill.’

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