PracticeAuditOFT cap report sits firmly on the fence

OFT cap report sits firmly on the fence

The prospect of a liability cap for auditors remains in doubt this week after a review by the Office of Fair Trading into competitiveness issues drew few conclusions.

Bold OFT report ‘misses the point’ says law firm

The review, requested by the department of trade at the beginning of last month, concluded that the introduction of a cap would be ‘competitively neutral overall’, effectively passing responsibility back to government. The DTI is expected to reach a decision next month.

But while the report offered only a glimmer of hope for auditors, some of their arguments were dismissed. The OFT was not convinced that the introduction of a cap would reduce the risk of collapse of a Big Four firm.

‘It is good and useful that the OFT found no compelling reason for a cap,’ said Peter Montagnon, head of investment affairs at the Association of British Insurers, adding that a cap would neither improve audit quality or competition.

Iain Richards, head of governance at Morley Fund Management, said he looked forward to ‘moving the debate on to the real issue of audit quality’.

But the accounting profession has not given up hope. PricewaterhouseCoopers partner Peter Wyman said the report ‘supports what the profession has been saying’, and that the argument was always about maintaining the existing state of competitiveness.

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