asked Her Majesty's Government:
Whether a firm that has prepared a report for creditors on the financial health of a business should be allowed to undertake any subsequent receivership work; whether this widespread practice may not tend to increase the number of unnecessary receiverships; and whether they intend to take any action.55WA
§ Lord Clinton-Davis
Her Majesty's Government have no plans to prohibit an investigating accountant from subsequently being appointed as receiver of a company. Investigating accountants must act professionally and impartially when reporting on a company's financial position, particularly given the potential for a conflict of interest in such situation. In a survey of their members carried out in 1994 the Society of Practitioners of Insolvency found that in some 65 per cent. of cases investigating accountants recommended steps other than insolvency proceedings (including receivership). Where however an investigating accountant is appointed as administrative receiver this is likely to save costs and thereby benefit the creditors.
If the noble Lord has any information or evidence which might show that the profession is not maintaining the required standards of impartiality and transparency, my right honourable friend the President of the Board of Trade would be pleased to hear from him.