PracticeAccounting FirmsFirms may win £200m liability cap this year

Firms may win £200m liability cap this year

Work on government proposals for a cap on auditor liability are at an advanced stage, the trade secretary Patricia Hewitt has indicated.

Link: Cap on liabilities looms

Her remarks, made in reply to a parliamentary written question, are being interpreted as a ‘very strong indication’ that the government will introduce legislation later this year.

MPs believe that consultation on the form of the legislation could be published as soon as April ? a move they suggest is necessary if there is to be enough time to discuss the issue.

Hewitt was responding to a question from MP Jim Cousins when she signalled that work on the proposals was well developed.

Her statement read: ‘The government is considering proposals on auditor liability in the company law review and will consult on its own detailed proposals in due course.’

Cousins, who is opposed to a cap, said: ‘My own view is that there will be some consultation, but it will be extremely perfunctory.’

Experts believe capping measures will be part of a new company law bill due to be presented by the next parliamentary session.

Last week, Accountancy Age reported that efforts by Big Four firms tolobby the government to introduce capping legislation had won sympathy in Whitehall. A figure of between £100m and £200m per individual case has been touted as the likely cap level.

Auditors this week urged the government to clarify its proposals soon.

‘There is the expectation that there will be a full companies bill before parliament for the 2003/2004 session,’ said Roger Davis, head of professional affairs at PricewaterhouseCoopers.

‘I think the government will need to make its policies on [audit capping]clear before then,’ he added.

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