Auditors fail to win legal guard

Ministers have rejected the accounting profession's appeals to give legal protection to auditors.
The government's new legislative programme, to be unveiled in the Queen's Speech tomorrow, will not contain measures to cap auditors' liabilities in litigation.
But the Department of Trade and Industry is expected to embark on a public consultation about the merits of introducing a cap or sticking with the status quo.
If the DTI finds evidence that reform is urgently needed, measures could be inserted into a company law bill that is expected in the Queen's Speech.
Ministers have not yet been persuaded of the case for a cap on auditors' liabilities, but they want attention paid to the risk that accounting firms could be destroyed by litigants and the consequences for choice and competition.
Ernst & Young, one of the big four firms, could be destroyed if a £2.6bn negligence claim by Equitable Life, the troubled life
assurer, succeeds against its former auditor.
The government's stance on auditors' liabilities is likely to please many accountants, although the profession will be disappointed that its pleas for a cap have not yielded a commitment to action.
The DTI company law bill will deliver some of the government's measures to strengthen financial reporting following US business scandals, including extra powers for investigators and regulators.
Meanwhile leading accountants signalled their unease at plans by an independent watchdog for a crackdown on the ability of accounting firms to carry out lucrative non-audit work for audit clients.
PwC, the UK's biggest accounting business, said plans by the Auditing Practices Board posed "tough challenges". Deloitte, another big four firm, said the plans could put UK companies at a "competitive disadvantage". E&Y said some of the recommendations would be "very onerous" for small companies.