Treasury moves to block cap
Final desperate attempts by the accounting profession to persuade the government of the need for a liability cap for auditors could be hit by Treasury attempts to block the move.
Link: Special report: Liability cap
The Treasury, which has been battling against a cap since it was first mooted, is understood to be using the recent less-than-favourable Office of Fair Trading report into competition issues as a stick with which to beat ministers who favour a cap.
The report argues that a cap will not boost competition or significantly affect the chances of a firm collapsing, and may well provide the ammunition for the Treasury to block any potential changes to liability law because of the potential negative political fallout.
‘It looks as if the Treasury has twisted the arm of the DTI over the OFT report,’ said John Davies, head of business law at ACCA. ‘It seems the DTI hasn’t got what it was looking for – a cap might well not happen.’
This week has seen a flurry of activity by accountants, desperate to claw back some ground before a decision is reached.
Trade secretary Patricia Hewitt returned from holiday on Monday to face calls from accountants for an urgent meeting to discuss what they see as factual inaccuracies contained in the OFT’s report.
‘This looks to be decision week,’ said Peter Wyman, head of professional affairs at PricewaterhouseCoopers. ‘There is huge pressure on the government to correct the OFT report.’
If the DTI decides not to opt for a cap in this bill on 7 September, the next opportunity for limited auditors liability may not come for several years.