Outlook: Accountants

IT IS NOT every day that one feels sympathy for investment bankers. But in complaining to the Office of Fair Trading about the terms under which leading accountancy firms are prepared to carry out the due diligence work associated with mergers and acquisitions, they seem to have a point.

Accountants - quite rightly - put themselves at the centre of the workings of the capital markets. Their work in checking the statements made by companies and their advisers is vital to continuing investor confidence in the markets. The value of that work is reflected in the fees they charge. So, when things go awry, it is a little rich for them to hold up their hands and say, Hey, I never told you that you could rely on this report.

The profession insists that it is correcting a situation whereby the bankers are looking for insurance by passing the risk of transactions on to somebody else. But the truth is that this is the latest in a series of attempts by accountants - and auditors, in particular - to limit their liability in the past decade - ever since the prospect of US-style lawsuits began to give partners in large firms sleepless nights.

Their defence is that the law - by making them potentially liable for the whole of a loss in a corporate collapse no matter how much they are to blame - is unfairly stacked against them. That law is under review by the Government, with the creation of limited liability partnerships one proposal for reform.

But, in the meantime, accountants should act within existing rules. Accountability demands that those who set themselves up as experts should expect to be sued if things go wrong. If nothing else, it helps concentrate the mind.

And if partners do not like the idea of losing their houses because of something done by somebody on the other side of the world whom they hardly know, that is as good a reason as any not to continue with the huge mergers that have seen the creation of the Big Five.