The other development is the discovery by plaintiffs' lawyers of the private-suit provisions of the Racketeer Influenced and Corrupt Organizations Act of 1970. Whether serious or patently silly, a RICO claim can have substantial settlement value when filed against a company that relies heavily on its reputational capital. Dubious from the start, they are especially shaky when extended to accountants. Start with cost-spreading. Lenders and investors can typically predict to the penny how much they will lose if they guess wrong on an investment that goes sour.
Draconian liability rules no doubt make accountants more careful in some way.
Accuracy and completeness, like all good things, come at a cost. The more extensive an audit, the more expensive, and there is always room at the margin to sample more of a given category of transactions, verify documents in a more elaborate way, and so forth. Because auditors cannot know in advance which will be the problem areas or clients, they will have to sell everyone the fuller audit. No advocate of stringent auditor liability has attempted to show that the gains would be worth it. Then there's the question of overoptimism.