At a time when U.S. firms are more reliant than ever on quality accounting and auditing services, the influential Business Roundtable is supporting liability caps for auditors.
The Roundtable is worried that the Big Four accounting firms could soon shrink to three or fewer firms if Congress doesn't act to stem the liabilities the firms face when things go wrong. In one case, Enrico Bondi, administrator to Parmalat, the Italian dairy company hit by accounting fraud in 2003, is seeking damages of $10 billion from former auditor Deloitte, Financial Times reported.
The Business Roundtable is made up of chief executives of some of the largest U.S. public companies and admitted the CEOs of the Big Four to its ranks last year.
The U.S. Chamber of Commerce, another influential business group in Washington, could end up supporting a liability cap if a report it has commissioned shows the need. The study was partly prompted by fears that the four firms Deloitte, Ernst & Young, KPMG and PwC could soon shrink in number, Financial Times reported.
In an interview with the Financial Times, John Castellani, Roundtable president, said a limit on liability could help increase choice by encouraging smaller accounting firms to compete against the big four.
“There are other accounting firms that could develop a global capability, similar to the big four, but shy away from it because of the increased liability and exposure to lawsuits,” he said. “To the extent we can do things that enhance competition and choice in this we are very supportive.”
The Roundtable's corporate governance taskforce is considering what the limit on liability could potentially be, Financial Times reported.
The Big Four have thus far been unsuccessful at convincing lawmakers a cap is needed, but the support from influential business groups could convince Congress to act.