Would a cap based on the size of the listed company, as measured by its marketcapitalisation be appropriate?
A cap determined by market capitalisation is more favourable than a single monetary cap. However, such a cap would fail to take into account the differing levels of potential risk associated with the audit of different industries. Question 3: Would a cap based on the audit fees charged to the company be appropriate? We see two potential benefits arising from this option. Firstly, to a large extent, the audit fee charged by the auditor is a reflection of the complexity of the work and the associated risks of the entity being audited (although there are cases where audit fees are loss leaders for more lucrative work amongst non-SEC registrant companies). In most cases, therefore, it is reasonable to see the audit fee as a proxy for the risk and the likelihood of claims arising from the work. Secondly, the adoption of a cap would potentially work to keep audit fees at a reasonable level and discourage the grouping of additional work under the main audit heading. Question 4: Do you agree w
