From Mr Michael Cleary and Mr Jeremy Newman.
Sir, Our two accountancy firms have emerged as the challengers to the "Big Four" as capital markets around the world have called for greater choice in the public company audit market. We feel it necessary, therefore, to comment on Lex's unfair criticism levelled at Charlie McCreevy, European commissioner for the internal market ("Auditor liability", March 19).
There is a pressing need for appropriate auditor liability reform. Auditors play a critical role in maintaining capital market confidence. The current system of joint and several unlimited liability is simply not sustainable if a robust audit profession is to survive. It means holding an audit firm to account for the totality of a corporate collapse, regardless of the degree to which its audit is found wanting. If any of Europe's largest companies were to fail, claims against their auditors could reach tens or even hundreds of billions of pounds.
Audit firms should not and cannot be expected to act as insurer of last resort for such claims. The current system opens the capital markets to the risks of a sudden, catastrophic loss of a major audit firm, with the consequential damage that would do to capital market confidence.
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