ICAEW president pushes for liability limit

Link: Ministers backtrack on audit cap

Illingworth, who takes over the ICAEW presidency today believes ‘the law is behind’ and the legal framework needs to be brought up to date.

‘We want something in the Queen’s speech on Company reform and we want audit liability to be part of that. There has got to be some statutory pinning under the FRC. There is a debate on the detail,’ he said.

Former ICAEW president, Peter Wyman, initiated the debate about a limit on auditors’ liability with the Government last year.

Illingworth said there had been many discussions, but that the debate had stalled while representatives of accountancy profession were ‘waiting’ for something to happen.

‘There is an economic argument, which we thought people had understood. But I think there is a political argument as well. There is a perception that auditor’s pockets are deep. There is also a real risk, a real possibility that any major claim would put a big firm out of business. And there are worries that three, perhaps, is too few,’ he said.

Illingworth believes that moving towards common standards in Europe will help to convince the government of the need for a limit on auditors’ risk either as a cap or as an acceptance of proportionate liability.

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