Auditors have failed in their increasingly desperate attempt to get a system of proportionate liability by contract included in the companies bill but they may only have to wait until next year for another opportunity.
The profession had hoped for last-minute amendments to the companies bill on Tuesday, but attempts by the Tories to introduce changes failed to meet with succeess.
Concerns from investors persuaded the government that further research and clarification were required.
‘It would be premature for the government to propose legislative reform before the process of examining and testing such a proposal has been completed,’ said a DTI spokeswoman.
She added that if a consensus could be reached the government would seek an ‘early opportunity to reform’.
Auditors’ hopes now hinge on legislation being included in the second companies bill, which may make an appearance in the new year. The government has been warned of the dangers of its inaction.
‘The government is running a huge risk to our capital markets,’ said ICAEW chief executive Eric Anstee. ‘The cost of providing an audit to a high risk company is likely to increase substantially. There may even be cases where a firm seeks to remove itself from the audit.’
The Tories’ failed amendments included proposals for a limit by contract, a 20x audit fee cap, and an across the board cap of £75m.
It is understood that although the DTI once accepted the auditors’ case, the Treasury stepped in to block a cap.