PracticeAccounting FirmsOFT says audit cap effect would be ‘neutral’

OFT says audit cap effect would be 'neutral'

The Office of Fair Trading's inquiry into competition issues surrounding the possible introduction of an cap on auditor liability has said the impact would be 'neutral'.

Link: Liability cap special report

In a statement, it said: ‘The OFT has not found compelling arguments to support claims that a cap on auditors’ liability would have pro-competitive effects on the audit market. It is likely that allowing audit caps would be competitively neutral overall.

The OFT did not find any compelling evidence that a cap would reduce barriers to entry and growth facing smaller audit firms, maintain competition between larger audit firms or reduce the risk of collapse of one of the Big Four.

But it did add: ‘Some forms of cap design could distort competition, so it will be important to ensure that there are no anti-competitive effects if scope for caps is allowed.’

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