§ Mr. Austin MitchellTo ask the Secretary of State for Trade and Industry whether any of Britain's top 300 companies are audited by firms criticised by his Department's inspectors.
§ Mr. RedwoodI refer the hon. Member to the reply I gave on 26 October 1990Official Report, column 330.
§ Mr. Austin MitchellTo ask the Secretary of State for Trade and Industry whether he will propose legislation under which company auditors would be banned from recruiting directors of their client companies.
§ Mr. RedwoodI see no reason to do so. Ethical guidance issued by the professional accountancy bodies states that no one should take part in the audit of a company if he has, during the period on which the report is to be made or at any time in the two years prior to the first day of that period, been an officer, other than auditor, 353W or employee of that company. Under part II of the Companies Act 1989, recognised supervisory bodies are required to have adequate rules and practices as to professional integrity and independence.
§ Mr. Austin MitchellTo ask the Secretary of State for Trade and Industry whether he will propose legislation under which shareholders would be given a copy of the auditors' letter of weakness.
§ Mr. RedwoodNo. The value of a letter of weakness stems from the fact that it is a confidential communication from the auditors to the management of a company. It must be for management, in consultation with the auditors, to decide which third parties, if any, need to be aware of its contents.
§ Mr. Austin MitchellTo ask the Secretary of State for Trade and Industry whether the accountants criticised in the Euroflame report are still permitted to carry out company audits.
§ Mr. RedwoodYes.