§ Mrs. Wiseasked the Secretary of State for Trade whether he will take steps to ensure that external audits of company accounts are carried out by auditors who are not retained by the company in any other connection.
§ Mr. Clinton DavisAlthough it is important that auditors should not have interests which might affect their independence of judgment, the provision of other service to a client company need not of itself create any conflict of interest, and a prohibition on the provision of such other964W services would create considerable practical problems, especially for small companies. I shall nevertheless be considering this question as part of my Department's review of company law.
§ Mrs. Wiseasked the Secretary of State for Trade (1) whether he is satisfied that the interests of shareholders and the public are now adequately safeguarded, in view of the now common practice of auditors also being employed as management consultants by boards of directors;
(2) what information he has of the number of company auditors who also undertake management consultancy work for the companies whose accounts they audit.
§ Mr. Clinton DavisDetailed information is not available but I understand that some of the larger firms of accountants do provide a management consultancy service. This service is normally run as a separate entity. I have no evidence to suggest that this practice constitutes a threat to the interests of shareholders or the public but if my hon. Friend has any evidence to the contrary I would ask her to submit it to me.