Margaret Hodge, chairman of the House of Commons public accounts committee, told specialists from PwC, Deloitte, Ernst & Young and KPMG that their skills ought to be directed to nobler ends than minimising tax bills for big business.“What really depresses me is you could contribute so much to society and the public good and you all choose to focus on working in an area which reduces the available resources for us to build schools, hospitals, infrastructure,” she said. [FT]
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If Failure = ‘Chaos’, What Does Chaos Look Like?
The British government has denied a change in the law there that would limit audit firms’ liability. The Big 4, who seem to enjoy a far more prestigious and influential existence in Britain than in the U.S., lobbied for a change to the law but it was ultimately dismissed by the British Business Secretary.
The British government cites existing law that would allow companies to reach agreements with their auditors to limit their liability.
Continued, after the jump
Under present company law, directors can agree to restrict their auditors’ liability if shareholders approve; however, to date, no blue-chip company has done so. Directors have seen little advantage in limiting their auditors’ liability, and objections by the US Securities and Exchange Commission (SEC) have also been a significant obstacle.
Ahh, the SEC, exerting its far-reaching influence another over sovereign government, not to mention their stellar track record . This does not amuse in the UK:
Peter Wyman, a senior PwC partner, who was involved in the discussions, said that the Government’s lack of action was disappointing. He said: “The Government, having legislated to allow proportionate liability for auditors, is apparently content to have its policy frustrated by a foreign regulator.”
The firms are lobbying, not solely for their own survival, dammit, but the sake of everyone, “They warned that British business could be plunged into chaos if one of them were bankrupted by a blockbuster lawsuit.”
We’re not really sure what ‘choas’ would entail. Hank Paulson had his own version of financial Armageddon but we hardly think that’s a plausible scenario if a Big 4 firm were to fail.
Perhaps there would be an army of accountants roaming the streets in zombie-like states offering their excel expertise to anyone that would accept it. While this is a completely horrifying scene, we’re skeptical of true ‘chaos’.
If you’ve got your own visions of chaos in the event of a large firm failure, describe it in the comments.
Audit firms left unprotected against claims of negligence [Times Online]
Also see: No legislated cap on audit liability [AccMan]