The push by the big accounting firms to get more protection from damages claims has gained momentum with a study from London Economics. The study's perspective is for the European market but in a globalised economy, it would have broader implications.

The research paper Study on the Economic Impact of Auditors' Liability Regimes argues, that an Arthur Andersen style action against one of the big four - KPMG, Ernst & Young, PwC and Deloitte - could pose a threat to financial stability of the wider economy.

"There could also be an impact on capital markets, especially during the Transition phase. If the disappearance occurs close to the end of the financial year, investors may have to wait longer for the release of audited accounts. They may also be less familiar with the new auditor. Whether this would lead to significant perturbations in capital markets is
an open question.

"Depending on which network were to disappear, financial institutions in particular could face very serious transition problems as the special skills, knowledge and cross-border reach their audits require may severely restrict their range of choice for a new auditor. This limitation of choice is likely to be exacerbated by the independence rule which may further restrict the range of potential replacement auditors."

The report does not recommend an EU-wide one-size-fits-all solution.

There are some obvious problems with implementing caps.

There is an argument that unlimited liability imposes a rigor and discipline on the auditors.

That's why last year's liability agreement between Sun Microsystems and Ernst & Young came under fire and why at the time, these sorts of arrangements were condemned by regulators and investors.

Let's not forget, the auditor is there to protect shareholders.