PracticeAccounting FirmsProportionate liability is still a good deal

Proportionate liability is still a good deal

Accountants and business representatives vehemently upheld the business benefits of proportionate liability on Tuesday despite the government's decision to bury any hopes of a cap.

Link: Liability cap special report

Patricia Peters, head of corporate governance at the Institute of Directors said the biggest benefits to proportionate liability would be its ability to support an open market for audit. ‘There are serious issues as to whether people are prepared to go on conducting (audit) business,’ she added.

Chris Connor, senior partner at Robson Rhodes, and Peter Wyman, head of professional affairs at PwC supported this belief. ‘Over time it could create an environment where more firms might be prepared to enter the arena,’ said Connor.

Wyman believes proportionate liability ‘would encourage mid-tier firms to come into the FTSE250’. Practically all FTSE250 companies are audited exclusively by the Big Four accountancy firms.

He re-emphasised that auditors were not trying to duck responsibility for their mistakes but to take responsibility only for the errors they make, not those of others.

Connor stressed more protection would also encourage others involved in governance to ‘take their responsibility more keenly’.

Limiting liability proportionately by contract, as suggested this week by the government, would bring greater transparency for shareholders and the investor community, added Connor.

Related Articles

Sexual harassment – is accountancy next for #MeToo?

Accounting Firms Sexual harassment – is accountancy next for #MeToo?

3d Karen Baxter, Lewis Silkin
Johnston Carmichael CEO appointed as ICAS president

Accounting Firms Johnston Carmichael CEO appointed as ICAS president

4w Emma Smith, Managing Editor
British Accountancy Awards 2018 – entries open!

Accounting Firms British Accountancy Awards 2018 – entries open!

1m Emma Smith, Managing Editor
Is the accountancy sector facing an international talent crisis?

Accounting Firms Is the accountancy sector facing an international talent crisis?

1m Lewis Silkin
RSM appoints new Chief Operating Officer

Accounting Firms RSM appoints new Chief Operating Officer

2m Alia Shoaib, Reporter
RSM announces 11 partner promotions

Accounting Firms RSM announces 11 partner promotions

2m Emma Smith, Managing Editor
BDO hires former AstraZeneca creative director as head of digital and innovation

Accounting Firms BDO hires former AstraZeneca creative director as head of digital and innovation

2m Emma Smith, Managing Editor
What does the future hold for listed accountancy firms?

Accounting Firms What does the future hold for listed accountancy firms?

2m Fergus Payne, Lewis Silkin