ICAS said it was in favour of allowing auditors to negotiate liability caps with audit clients.
These it says, ‘should be subject to safeguards set out to safeguards set out in statutory rules – so that sufficient liability remains to ensure audit quality’.
The institute issued its remarks in response to the DTI’s consultation on director and auditor liability, published in December last year.
David Wood, deputy director of accounting and auditing, said: ‘We would support a cap based on some multiple of the audit fee, as the audit fee would generally be a reasonable proxy for the size, risk and complexity of the client. The audit fee multiple which established the amount of the lowest permissible cap would need to be significant enough to ensure audit quality but should not be so large to threaten firms’ survival’
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