The European Commission is considering an EU-wide cap on the amount for which company auditors can be sued, according to sources in Brussels.
Internal market commissioner Charlie McCreevy believes that a major lawsuit could bring about the ruin of one of the Big 4 accountancy firms, and is set to launch a public consultation into how a cap could work.
Such a move would prevent another Arthur Andersen-style collapse, which occurred in the wake of the Enron scandal. It would therefore help to quell fears about the dominance of the top auditors – which would become even more densely consolidated if one were to fold.
Possible options include a fixed cap on claims or proportionate liability, whereby audit firms pay according to the level of their involvement in a case.
Currently, there are six European countries that have caps on auditor liability, including Germany and Belgium. Proponents argue that introducing such a system across the continent would make it easier for smaller audit firms to enter the market.
The biggest accountancy companies are facing 16 separate claims for more than $200 million (£101 million) in damages, The Business reports. Five of these are for more than $1 billion.
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