Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Baroness Noakes: My Lords, I thank the Minister for his reply and for updating me on the new name of what used to be called POBA. It just shows how difficult it is to keep up these days.
16 May 2006 : Column 154
I appreciate what the Minister has said. I would like to read it again in Hansard, but he has answered the point that I made on the duplication of information flow. I hope that he will look again at the drafting as it is ambiguous, whether or not there is a choice of which route information should go. If there is a choice, it is a recipe for administrative problems. I put it no higher than that. I beg leave to withdraw.
Amendment, by leave, withdrawn.
[Amendments Nos. 354 to 359 not moved.]
Lord McKenzie of Luton moved Amendment No. 360:
On Question, amendment agreed to.
Lord McKenzie of Luton moved Amendments Nos. 361 and 362:
"DUTY OF AUDITOR TO NOTIFY APPROPRIATE AUDIT AUTHORITY
(1) Where
(a) in the case of a major audit, an auditor ceases for any reason to hold office, or
(b) in the case of an audit that is not a major audit, an auditor ceases to hold office before the end of his term of office,
the auditor ceasing to hold office must notify the appropriate audit authority.
(2) The notice must
(a) inform the appropriate audit authority that he has ceased to hold office, and
(b) be accompanied by a copy of the statement deposited by him at the company's registered office in accordance with section 510.
(3) If the statement so deposited is to the effect that he considers that there are no circumstances in connection with his ceasing to hold office that need to be brought to the attention of members or creditors of the company, the notice must also be accompanied by a statement of the reasons for his ceasing to hold office.
(4) The auditor must comply with this section
(a) in the case of a major audit, at the same time as he deposits a statement at the company's registered office in accordance with section 510;
(b) in the case of an audit that is not a major audit, at such time (not being earlier than the time mentioned in paragraph (a)) as the appropriate audit authority may require.
(5) A person ceasing to hold office as auditor who fails to comply with this section commits an offence.
(6) If that person is a firm an offence is committed by
(a) the firm, and
(b) every officer of the firm who is in default.
(7) In proceedings for an offence under this section it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.
(8) A person guilty of an offence under this section is liable
(a) on conviction on indictment, to a fine;
(b) on summary conviction, to a fine not exceeding the statutory maximum."
After Clause 513, insert the following new clause
"DUTY OF COMPANY TO NOTIFY APPROPRIATE AUDIT AUTHORITY
16 May 2006 : Column 155
(1) Where an auditor ceases to hold office before the end of his term of office, the company must notify the appropriate audit authority.
(2) The notice must
(a) inform the appropriate audit authority that the auditor has ceased to hold office, and
(b) be accompanied by
(i) a statement by the company of the reasons for his ceasing to hold office, or
(ii) if the copy of the statement deposited by the auditor at the company's registered office in accordance with section 510 contains a statement of circumstances in connection with his ceasing to hold office that need to be brought to the attention of members or creditors of the company, a copy of that statement.
(3) The company must give notice under this section not later than 14 days after the date on which the auditor's statement is deposited at the company's registered office in accordance with section 510.
(4) If a company fails to comply with this section, an offence is committed by
(a) the company, and
(b) every officer of the company who is in default.
(5) In proceedings for such an offence it is a defence for the person charged to show that he took all reasonable steps and exercised all due diligence to avoid the commission of the offence.
(6) A person guilty of an offence under this section is liable
(a) on conviction on indictment, to a fine;
(b) on summary conviction, to a fine not exceeding the statutory maximum."
On Question, amendments agreed to.
Clause 514 [Information to be given to accounting authorities]:
Lord McKenzie of Luton moved Amendment No. 363:
"(1) The appropriate audit authority on receiving notice under section (Duty of auditor to notify appropriate audit authority) or (Duty of company to notify appropriate audit authority) of an auditor's ceasing to hold office
(a) must inform the accounting authorities, and
(b) may if it thinks fit forward to those authorities a copy of the statement or statements accompanying the notice."
The noble Lord said: My Lords, in moving government Amendment No. 363, I shall speak also to government Amendments Nos. 369 and 370 and the other amendments in the group.
Clause 514 provides for the audit authoritytypically POB or one of the supervisory bodieson receiving statements from an auditor who is ceasing to audit a company to inform the accounting authorities; that is, the Secretary of State and his delegate, currently the FRRP.
Amendments Nos. 363, 369 and 370 are technical amendments, mainly consequential on the government amendments in the group we have just
16 May 2006 : Column 156
discussed. Unless there are questions about them, I shall move on to discussing the other amendments in the group.
On reviewing the debate on the similar amendments in Grand Committee, I think that there may have been some misunderstanding about the Government's intentions in Clause 514. The statements made by resigning or otherwise departing auditors and the corresponding companies are to be sent to the audit authorities because their role is to oversee auditors, and they should take an interest in the reasons for their dismissal or resignation.
On occasions, it is possible that these statements will reveal that the auditors believe that there has been some significant accounting irregularity and, when it happens, we think it appropriate for the audit authority to bring it to the attention of the accounting authorities. The Financial Reporting Review Panel will want to know about such accounting irregularities, as will the Department of Trade and Industry. The FRRP may want to apply to the court for an order requiring revision of the accounts. On the other hand, the DTI can consider investigation, inspection or prosecution. There are two accounting authorities mentioned in the Bill because they have different roles and powers.
The FRRP will not want to receive statements about most situations where the auditor and company may have had a difference of view but where the published accounts have been agreed. Nor will the DTI, so the task we are giving the DTI is not to deal with a flood of paperwork of modest interest, as I think was suggested in Grand Committee, but to receive occasional reports of serious irregularities.
I am sorry that we did not explain what was envisaged more clearly in the Explanatory Notes or in Grand Committee. I hope that, with this explanation, the noble Baroness will accept that it is entirely reasonable that the audit authorities should have discretion about what statements to forward to the audit authorities, and that those few statements that are worth sending should go to both the FRRP and the DTI. I beg to move.
Baroness Noakes had given notice of her intention to move, as an amendment to Amendment No. 363, Amendment No. 364:
Next Section | Back to Table of Contents | Lords Hansard Home Page |