Ministers backtrack on audit cap

Link: Auditor liability – up to a point

Since signalling in recent months that they would be willing to see firms liability ‘capped’, ministers have come under pressure from governments in Europe and the US, and from some investment bankers and directors, not to impose a ceiling.

John Griffith-Jones, chief operating officer of KPMG, said this week that granting a cap to the liability on audits to firms was no longer ‘flavour of the month’.

And Griffith-Jones questioned whether the accountancy industry would ‘ever make progress’, as the government doesn’t believe ‘there are many votes’ to support the introduction of a liability cap.

‘The accountancy firms are for, so are the institutions. Everyone else is against, or indifferent. The government’s primary duty is to insure a boost to financial markets in the long term, so it would only be interested to the extent that it endangered the financial stability by markets falling over. I guess that’s why they are not thinking of us at the front of this debate,’ he said.

The DTI confirmed that it was considering the results of the consultation on limited liability and said it ‘would announce a response in due course’ without giving a date.

ICAEW president Peter Wyman said it would not necessarily be a problem if the government ‘decides against a cap’, as long as it was willing to talk about proportionality. ‘There is more than one way,’ he said.

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