Speaking on the day that trade secretary Patricia Hewitt gave her speech at the Labour Party Conference, Tory shadow home affairs minister Andrew Mitchell (pictured) lambasted the DTI’s decision not to introduce a cap for auditors, with the department instead opting to look into the issue of proportionate liability.
He demanded the government act to introduce new legislation when the companies bill reaches report stage on 19 October.
Mitchell argued that UK firms cannot be left without options for high quality audit due to the collapse of another firm or the Big Four withdrawing from the audit market.
‘This is not about auditor liability, it is about good corporate governance practice,’ he said.
At a standing committee meeting on the companies bill earlier this month, Mitchell tabled numerous amendments to the bill that would allow several forms of liability cap to be introduced. ‘I was trying to show that there are a bunch of ways of dealing with this issue,’ he said.
While Mitchell agreed with the government’s change of heart on proportionate liability, he said that such a system could be introduced in the current companies bill, tabling one amendment suggesting this, before withdrawing it.
The government, however, is unlikely to relent. DTI minister Jacqui Smith said that proportionate liability ‘raised many questions, which we need to work through with companies, auditors and investors’.
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