PracticeAuditExclusive: DTI backs audit cap summit

Exclusive: DTI backs audit cap summit

The Department of Trade has said it is willing to convene a high-level summit on an audit liability cap following a surge in opposition from investors.

Link: Institutes attacked by investors

Accountancy Age revealed last week that investors – including Morley Fund Management, which controls £97bn of funds – have expressed disquiet over what they view as efforts by the ICAEW to ‘railroad’ through a cap on auditors’ liability in the companies bill, without first looking at the legal and regulatory framework around auditors.

This week, it emerged that ACCA and the ICAEW are at loggerheads over the issue of a summit. ACCA believes a summit bringing investors together with auditors is the way to build a consensus, while the ICAEW described the proposal as ‘silly’.

The DTI said on Tuesday that it was willing to ‘facilitate’ a summit, after several organisations involved in the consultation on a liability cap proposed the idea.

Allen Blewitt, the newly appointed chief executive of ACCA, said a summit would go someway to dealing with what he described as an ‘ill-informed’ investor community.

‘I’m calling for a summit of interested parties, and it needs to be much wider than just the DTI and the accounting profession,’ Blewitt said.

Observers believe that a summit could delay efforts, particularly by former ICAEW president Peter Wyman, to get a cap included in the companies bill currently making its way through parliament.

Blewitt?s proposal received strong support from both ICAS and CIMA. Charles Tilley, chief executive at CIMA, said he would welcome a debate to ‘thrash’ out a resolution to the issue. David Wood, a director at ICAS, said a summit was ‘the only way forward’.

Meanwhile, ICAEW has said it intends to push on using the consultation process and lobbying in the hope of winning a cap.

David Illingworth, president of the ICAEW, rejected Blewitt’s suggestion, saying that the institute would continue to work to the timeframe of the DTI’s consultation process.

‘The consultation is there, and we need to work towards that timetable. It would be silly to have a summit,’ Illingworth said.

Government consultation on a cap is due to close on 12 March.

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