UK: Yesterday in Parliament

Two items of interest. The Companies’ Remuneration Reports Bill reached the Committee stage in the House of Lords. However, no amendments were tabled and no member of the House of Lords indicated the wish to speak. The House therefore agreed that the order of commitment be discharged and the Bill will now proceed to the Third Reading stage on July 13.

There was also a brief debate concerning the relationship between auditors and banks. Lord Lea of Crondall asked the Goverment "what action they are taking to prohibit interlocking directorships between auditing companies and banks and other financial institutions"? The debate can be read here. Lord Davies of Abersoch, the Minister for Trade, Investment and Business, responded on the Government's behalf and in one reply stated:

The independence of auditors has been the subject of increased regulation over the past 20 years. Indeed, the Treasury Select Committee recently recommended a consultation on the issue of auditors earning fees from non-audit work and the Financial Reporting Council is planning to consult later in the year. On the general point of where the auditors were during the financial crisis, there are lessons to be learnt for the accounting profession, just as there are for many different aspects of the financial services industry. As someone who worked in the industry, I know that auditors were involved in the risk governance and control side. We are not aware, however, of any evidence of an audit failure in one of the banks where the Government have had to intervene. Furthermore, the Audit Inspection Unit of the Financial Reporting Council, which reviews the audits of large firms, has concluded that audits are fundamentally sound".