HC Deb 15 January 1991 vol 183 cc466-7W
Mr. Austin Mitchell

To ask the Secretary of State for Trade and Industry (1) whether he has any proposals for companies to write off purchased good will against profits rather than reserves;

(2) if he will propose legislation under which property companies would be prevented from capitalising the interest on their borrowings;

(3) what proposals he has for defining mergers and eliminating the anomalies arising from merger accounts.

Mr. Redwood

Issues of this sort are better dealt with through accounting standards than in the law. The matters raised are encompassed within exposure drafts issued by the Accounting Standards Committee and the responses received will be considered by the Accounting Standards Board in due course.

Mr. Austin Mitchell

To ask the Secretary of State for Trade and Industry what proposals he has for requiring every public company to establish an audit committee and to specify in the annual reports any changes in accounting practice and its implications for the future.

Mr. Redwood

The Government endorse the use of audit committees, but have no plans to impose them on companies through legislation. Companies must be free to decide for themselves whether such committees are appropriate to their circumstances.

The existing requirements of SSAP2 in respect of the disclosure by companies of the accounting policies they have adopted and of SSAP6 in respect of the disclosure of the effect of prior period adjustments arising when an accounting policy is changed already cover the question of accounting policies.

Mr. Austin Mitchell

To ask the Secretary of State for Trade and Industry what consultations he has had with the professional accountancy bodies about the establishment of a review panel to examine the accounts of listed companies and to establish an urgent issues task force to clear up areas of anomaly and clarify accounting guidelines.

Mr. Redwood

My Department consulted the Consultative Committee of Accountancy Bodies fully about the implementation of the Dearing report, which recommended the creation of a review panel and an urgent issues task force.

Mr. Austin Mitchell

To ask the Secretary of State for Trade and Industry what proposals he has to ask the Audit Commission to lay down guidelines for the accountancy profession on the auditing of company accounts.

Mr. Redwood

None.