No liability cap in Queen's speech
Tomorrow's Queen's speech spelling out the government's new legislative programme will not include plans to protect auditors from legal action.
Link: The Debate: Is new liability legislation needed?
The profession has been arguing long and hard for a cap on auditor liability, but has failed to convince ministers.
However, according to reports, the Department of Trade & Industry is expected to undertake a public consultation on the merits of introducing a cap and if it finds evidence in favour of such a move, such a measure could be included in the Company Law Bill, which is expected to be included in the Queen’s speech.
Andersen, the former Big Five firm was destroyed following litigation emerging from the Enron scandal, eventually being absorbed by Deloitte in the UK.
Presently, Ernst & Young is facing a £2.6bn negligence claim from Equitable Life.
Peter Wyman, PwC partner and former ICAEW president, is one of those in favour of a cap on liability, and is calling for a ‘system where auditors are responsible only for the consequences of their own negligence’.
Last month, ICAEW chief executive Eric Anstee, said the government should act quickly and include proposals to limit the liability of auditors in the Companies Bill.