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ICAEW president Peter Wyman yesterday told delegates at the 16th World Congress for Accountants in Hong Kong, a change was needed to liabilities firms face or another big firm would be lost.
‘Unless action is taken now to limit auditors’ liability there may not be four global audit firms much longer,’ he said. ‘The profession has argued for a system of proportionate liability, ending the existing system of joint and several liability which has led to excessive claims, as auditors have been perceived as having the deepest pockets.’
Responding to criticism from lawyers, Wyman argued that if a proportional liability proved to be too complex, at least a capping arrangement should be put in place. He called on the government to ‘take steps’ to minimise the risk of firms succumbing to a disaster scenario.
But he also warned politicians to ‘loosen their regulatory grip’ and trust self-regulation once more. He claimed some proposed measures would turn accountants into ‘old-fashioned state accountants’, unequipped to serve global companies and shareholders in a free market economy.
Wyman also said firms should publish annual reports ‘similar’ to those of their clients. He said the report should at least contain financial statements, explanation of the firm’s legal structure and high level review of quality assurance procedures.
Much of Wyman’s speech centred on re-establishing the integrity of auditors and accountants in the eyes of investors. ‘We must explain what the audit does and does not do and stress the benefits and professional elements that underpin audit quality and quality of financial reporting.’
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