§ 6. Sir JOHN FERGUSONasked the President of the Board of Trade whether, seeing that the published accounts of the Royal Mail Steam Packet Company for 1926 to 1929 showed profits from controlled subsidiary concerns which had been neither earned nor received, but that losses had in fact been incurred, and seeing that the auditors certified the correctness of the Royal Mail Steam Packet Company's accounts for those four years, he will take legislative steps to ensure that auditors shall, in future, specifically exclude from their certification such entries in accounts as have not been certified by the auditors who certify the accounts in which such entries are embodied?
§ 10 and 11. Mr. EDEasked the President of the Board of Trade (1) whether, in view of the failure of the auditors certificates on the Royal Mail Steam Packet Company's accounts to inform shareholders of the non-receipt of money-which was proved after investigation not to have been received, although brought into the certified accounts of the company, he will consult the various accountants' societies for the purpose of drawing up a formula to ensure that auditors' certificates on published accounts shall become effective as a protection to the public;
(2) whether, pending the framing of a form of certificate that shall guarantee to the public that the accounts represent the actual financial condition of concerns operating under the Companies Act, 1929, or under royal charter, he will take steps to forbid the attachment of an auditor's certificate to such accounts?
§ Mr. W. GRAHAMAs the House will be aware, all the circumstances in connection with the affairs of this company are being investigated by the voting trustees, and no statement can usefully be made at the present time. Meanwhile I would point out that the form of auditor's report which is prescribed by Section 134 of the Companies Act, 1929 was considered by the Company Law Amendment Committee which included three eminent accountants, and that committee reported in 1926 against any amendment of the law as it then stood and now stands. It is open to the auditors to make in their report any observations which they think fit, and under the present Companies Act the auditors are given the right to attend any general meeting at which accounts examined or reported on by them are to be laid before the company and to make any statement or explanation they desire in respect of the accounts. As regards the manner in which items relating to its subsidiary companies have to be dealt with in the balance sheet of a company, I would refer to the new provisions which are contained in Sections 125 and 126 of the Companies Act, 1929, especially Subsection 2 from the latter section.
§ Sir J. FERGUSONIs it proposed to allow the company to retain the charter while directors who are responsible for the present position remain members of the board?
§ Mr. GRAHAMI am afraid I could make no statement regarding that matter this afternoon, because the work of the voting trustees and others will have to be completed, and the hon. Member will also recall that yesterday the Attorney-General said that everything would be considered by him at the appropriate point.
§ Mr. HOLFORD KNIGHTWill the matters under review include the legal liability of the auditors for the correctness of their certificates?
§ Mr. GRAHAMThat also is a point which plainly I could not deal with in reply to a supplementary question in the House. I must await further developments.