Jack Cieslieski at Accounting Observer wrote a piece auditor liability. Auditing firms have been seeks caps on their liability for failed audits. Large firms are afraid that they might end up in the same trouble Arthur Andersen found themselves in post-Enron: Huge liability put them out of business.
But Jack makes a very interesting observation: Auditors could limit their own liability by choosing to do better audits. There’s nothing stopping them from being more thorough in their audits and creating better procedures that make the audits more effective. I agree!