Nearly two years ago, I wrote about some disturbing developments where a European study pushed for liability caps for auditors. There is an issue of moral hazard here. Auditors should be held accountable and not having caps imposes a rigor and discipline on the profession.

But now, as expected, caps are coming in. The European Commission has recommended limited liability for auditors. The argument is that this will encourage alternative firms to step up to the plate.

But at what cost? The other question is whether these caps will be adopted in other jurisdictions. That's more than likely to happen.