Government accused of audit cap ‘mockery’

Link: In depth: Liability cap

The charge came from shadow trade minister Andrew Mitchell after trade secretary Patricia Hewitt delivered a written Commons statement killing hopes of cap on auditor liability but leaving open the prospect of limiting it proportionally.

Mitchell lashed the bill as ‘deeply flawed and often poorly drafted’ and protested that the auditor liability issues was ‘a glaring omission’.

He said the problem was ‘a real threat to the stability of the audit profession’ and accused the government of responding ‘very negatively’.

Lib Dem spokesman Brian Cotter said proportionate liability would carry the support of business and the profession and called on the government to commit to it.

Trade minister Jacqui Smith – challenged by Labour MP Jim Cousins, a member of the treasury committee – said the government has not closed its mind to a statutory ban on auditors supplying non-audit services or ‘anything which helps us to improve confidence in both financial reporting and the quality of audit’.

She made it clear there was no carte blanche for proportionate liability proposals. Ministers would want to ensure audit quality was driven up and the competitive position of the audit market improved.

Tory accountant MP Mark Hoban had earlier urged the government to accept the conclusions if the industry reached consensus.

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