PracticeConsultingFDs hit out at auditors

FDs hit out at auditors

The vast majority of finance directors believe that auditors should not be able to cap their liability in negligence cases, this week's Big Question survey has revealed.

The Accountancy Age/Reed Accountancy Personnel poll showed that 66% of FDs are against auditors limiting their liability in cases of negligence, while only 27% support limiting the amount that audit firms are sued.

The findings clearly put FDs in opposition to proposals in the Company Law Review, published recently, which would offer auditors greater protection and make it less likely that they could be sued.

Among those against auditors setting limits, many believe the quality of the audit would suffer if a ceiling was placed on the amount for which auditors can be sued. According to one FD: ‘They have to be accountable for the power they wield. Reducing that may cause less care and dedication on their part.’

David Neve, FD at Thamesdown Software Fulfilment, said auditors are ‘not responsible enough anyway. If you get paid for something, you must deliver.’

Respondents on both sides of the argument objected to inflated auditors’ fees.

One FD said that auditors should cap their liability ‘if they charged a reduced fee’, while another was against the limit because ‘their fees are so high anyway that they always win. They want to have their cake and eat it.’

But very few among those supporting auditors do so wholeheartedly.

‘The amount depends on the size of the audit fee,’ says one FD. ‘There are times when auditors will have incomplete information.’

Some of those speaking out for limiting liability believe this would restrain the UK from becoming too litigious.

‘The American culture of ever-increasing claims should be brought to an end,’ said one FD.

Links

Reforms could protect auditors

End Big Five compensation show

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

5m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

11m Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

12m Kevin Reed, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

12m Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

12m Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

1y Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

1y Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

1y Stephanie Wix, Writer