Tuesday, March 24, 2009
31 More Years-5?
"Auditors will lobby the UK government for a statutory requirement that limits their liability after the current operational system has been effectively blocked by US regulators. ... But the US [SEC] has now indicated to the UK government that it will not accept any limited liability agreements by British companies who are also registered with it, a list which includes many of the biggest UK companies. ... 'This is the door being slammed shut in reality,' said Peter Wyman, global director for public policy at PWC, who added that he did not consider it would be a 'huge shift' to make UK policy statutory. ... SEC opposition has focused on the negotiation required between auditors and company directors to agree to limits. Officials fear this compromises independence, which would not be the case if the agreements were mandatory. ... Officials fear market chaos should one of the Big Four collapse as suddenly as Arthur Andersen did, leaving companies scrambling to find a new auditor", Jennifer Hughes at the FT, 11 March 2009.
More Big 87654 snake oil. CPA liability limits are what the capital markets don't need. If Big 87654 work is bad now, consider how much worse it will get with liability limits. I have long advocated repealing 1995's Litigation Reform Act to increase CPA liability for bad audits. If the officials are concerned about a Big 87654 firm collapsing, I say bust 'em up into the not so big 40. We now have CPA firms which are TBTF just like banks! Wonderful. We see how vigorously the TBTF banks are regulated.