From the moment Treasury Secretary Henry Paulson created the Committee on Capital Markets Regulation, an independent, bipartisan committee to study the competitiveness of U.S. capital markets in September 2006, the Big Four accounting firms had the committee's members in their sights. Haunted by the memory of the Arthur Andersen collapse, their goal was to secure a recommendation for an audit liability cap.
Less than three months later, the Big Four got their wish when the committee, which includes the CEOs of Pricewaterhouse?? 1/2 Coopers and Deloitte & Touche, released its interim report in November. The report unequivocally supported the Big Four's proposal and acknowledged the pressures that have plagued auditors in the post-Enron era.
Kueppers also claims that insurance is unavailable for catastrophic claims and points out that the liability is borne entirely by private capital because accounting firms are not allowed to go public. Finally, he maintains that accounting firms are at a disadvantage in taking major cases to trial because the risks are too great.
Still, critics of a cap say the arguments in its favor amount to nothing less than fear mongering.
"It has been a mistake for auditors not to deal with the ramped-up auditing requirements by relieving the tension that has built up across the spectrum of client management, in which one key position is certainly general counsel," he says. "Relieving the tension means we can work more effectively, and unless we work more effectively, we can't do our best."