HL Deb 13 November 1989 vol 512 cc1153-4

431 Page 208, line 6, leave out from 'which' to end of line 7 and insert '—

  1. (a) part was spent being trained in company audit work, and
  2. (b) a substantial part was spent being trained in company audit work or other audit work of a description approved by the Secretary of State as being similar to company audit work.

For this purpose "company audit work" includes the work of a person appointed as auditor under the Companies (Northern Ireland) Order 1986 or under the law of a country or territory outside the United Kingdom where it appears to the Secretary of State that the law and practice with respect to the audit of company accounts is similar to that in the United Kingdom.'.

Lord Strathclyde

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 431. This amendment concerns the content of the practical training which auditors must undergo. The amendment substitutes that a part must be spent on company audit work and a substantial part on such work or other work approved by the Secretary of State as being similar to company audit work.

Moved, That the House do agree with the Commons in the said amendment. —(Lord Strathclyde.)

Lord Williams of Elvel

My Lords, I am puzzled by the expression "similar to company audit work". Does that include training in consultancy, which many auditing firms engage in? We have had a number of arguments about whether they should be engaging in consultancy work and whether fees should be shown separately. Parts of the Bill cover that.

What is an activity similar to company audit work? By what criteria will the Secretary of State approve these activities as being similar? Perhaps the noble Lord can help me on that point.

Lord Strathclyde

My Lords, let me explain. The amendment meets a concern expressed by the Institute of Chartered Accountants in England and Wales. It represented that in some offices there would be a concentration of audit work other than company audit work —the auditing of building societies, for example —and that that could count towards the requirement in the Bill. We have sought to meet that concern. We believe the directive permits us to do so as it refers to the auditing of similar financial statements. The amendment therefore provides that a substantial part of the training must be spent on company audit work or other audit work which is approved by the Secretary of State as being similar.

In order to ensure that auditors are properly trained to carry out company audits, the amendment also requires that part of the training is spent on company audit work whether in the UK or under a jurisdiction where the law and practices of company auditing are similar.

Lord Williams of Elvel

My Lords, before the noble Lord sits down, I wonder whether he can enlighten me on this question of consultancy. Does this mean that people can be trained in consultancy as well as audit work for part of their time?

Lord Strathclyde

My Lords, I can broadly say that the training in work is similar to company audit work, but management consultancy is not envisaged as being acceptable.

On Question, Motion agreed to.