Half of FDs against audit cap
Almost half of UK finance directors believe that a cap on auditors' liability would prove anti-competitive to the industry.
Link: Liability cap – a special report
A massive 49% of FDs polled said that legislation to limit auditor’s liability would prove anti-competitive, with 25% saying it would not, while 26% remained neutral.
These are the findings of the latest Accountancy Age/Reed Finance Big Question, which come at a critical time for the audit industry. The Office of Fair Trading is currently involved in a review of the competition problems a liability cap might create.
One FD respondent to the survey said: ‘The big shall get bigger, the small shall get smaller and the professionalism of the audits shall deteriorate even further.’
Meanwhile, the National Association of Pension Funds has confirmed that Christine Farnish, chief executive of the NAPF, and board member at the OFT, would take no part in its review.
A spokesperson for the NAPF said Farnish would ‘stand aside’ if any matter arising from the day-to-day inquiry was referred to the board.
The OFT could not say at the time Accountancy Age went to press if any other board members would step aside if they found themselves in similar circumstances.
A potential conflict of interest exists because the NAPF has expressed reservations about the cap and has supported calls for a competition inquiry into the activities of the Big Four.
The OFT also confirmed that the inquiry into competition issues arising from a cap had already begun with an internal team made up of economists, lawyers and statisticians.
The team will make use of existing, publicly available information in conducting its report, as well as public submissions to the DTI’s consultation document released in December 2003.
The OFT team is scheduled to issue its report on the liability cap by the end of the month, which could see it introduced as an amendment to September’s companies bill.