The government’s consultation on auditor and director liability closes tomorrow and was expected to attract strong views from the investor community, many of whom oppose the inclusion of legislation into the companies bill that would permit a liability cap.
In its response, Morley Fund Management, which is responsible for over £110bn worth of funds, insisted that the current status quo should remain given the ‘extensive changes auditors have already secured in circumscribing their liabilities’. It also questioned whether the current Big Four was currently operating in a healthy competitive environment.
‘There is a valid concern about whether, what has become a complex monopoly, operates in the public interest,’ stated Morley’s submission.
‘On that basis and given the significance of the problems that exist, there would be real merit in a full Competition Commission inquiry being undertaken.’
The submission pointed to the fact that the Big Four controls 100% of FTSE100 audits and 96% of the FTSE250, as evidence that competition is being restricted.
Morley argued that any repeal of section 310 of the Companies Act 1985, which would enable auditors to limit liability, would ‘only continue the process of attrition that has been seen in the effectiveness, quality and value of audit’.
On the other side of the argument, the ICAEW has said in its submission that it would like to see proportionate liability introduced, but as a next best solution, it would prefer for a liability limit set as a multiple of audit fees.
HMRC breaches client confidentiality; and partner profits fall at EY. These stories and more discussed in Friday Afternoon Live
Two new audit partners have been appointed at the firm BDO in its audit practice following continued growth and investment
Changes to the tax system is urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group
Six new partners have been revealed by top ten firm Mazars