§ Mr. Austin MitchellTo ask the Secretary of State for Trade and Industry whether he will propose legislation under which auditing firms would be banned from conducting public opinion polls for their audit clients.
§ Mr. RedwoodI see no reason for doing so. Under part II of the Companies Act 1989, the recognised supervisory bodies must have adequate rules and practices to ensure that company audit work is conducted properly and with integrity, and that persons are not appointed as company auditors in circumstances in which they have any interest likely to conflict with the proper conduct of the audit.
§ Mr. Austin MitchellTo ask the Secretary of State for Trade and Industry whether he will propose legislation under which auditors would be prevented from issuing a disclaimer of opinion.
§ Mr. RedwoodNo. Circumstances of fundamental uncertainty may occasionally arise in which the auditor is unable to form an opinion one way or the other on whether a set of accounts gives a true and fair view. In such circumstances, it is better that an auditor should decline to give an opinion than that he should be forced to give one which cannot, on the evidence available, be justified and could therefore be misleading.
§ Mr. Austin MitchellTo ask the Secretary of State for Trade and Industry what arrangements applicants for supervisory body status under the Companies Act have offered to enable a member of the public to ascertain whether an auditor(a) has derived 15 per cent. or more of his fee from any one client and (b) has lent money to an audit client.
§ Mr. RedwoodAll the applications that we have received for recognition as supervisory bodies include guidance to the effect that an auditor should not lend money to an audit client, and should not in normal circumstances derive more than 15 per cent. of his fee income from one client.