§ Mr. Austin MitchellTo ask the Secretary of State for Trade and Industry what plans she has to prevent the early shredding of(a) audit records and (b) bank reconciliations by auditors and to require audit records to be kept to facilitate investigation of audit failure; and if she will make a statement.[109159]
§ Miss Melanie JohnsonThe keeping of audit records is covered by regulation 3.08b of the Institute of Chartered Accountants of England and Wales (ICAEW) Audit Regulations 1995 (as amended in 1999). This regulation says that
a registered auditor must keep all audit working papers which auditing standards require for an audit for a period of at least 100W six years. The period starts with the end of the accounting period to which the papers relate.The relevant auditing standards are SAS 230 which details the content of audit working papers, and others such as SAS 200 (on planning) which detail other documentation that needs to be created during the course of an audit. Early shredding of any relevant audit papers, including audit records and bank reconciliations where these form part of the audit working papers, is therefore contrary to regulations. While these are not statutory regulations, compliance with them is indirectly a statutory requirement; the Companies Act 1989 requires audit firms to be registered with a Recognised Supervisory Body such as the ICAEW and to subject themselves to their rules including inspection and enforcement of compliance.
§ Mr. Austin MitchellTo ask the Secretary of State for Trade and Industry what representations she has received from(a) accounting bodies and (b) professional bodies in support of her proposal to transfer regulatory functions in accountancy and audit from the Accountancy Foundation to the Financial Reporting Council.[109160]
§ Miss Melanie JohnsonThe majority of accountancy bodies and other representative bodies that responded to the Government's consultation document on the review of the regulatory regime of the accountancy profession considered that there was a strong case for the Financial Reporting Council (FRC) taking on the functions of the Accountancy Foundation.
On 29 January 2003 my right hon. Friend the Secretary of State for Trade and Industry announced that she had accepted the conclusions of the Review team, the main conclusion of which was that the FRC should take on the functions of the Accountancy Foundation. On 11 March the Government published a consultation document on proposals for statutory provisions to support the new regulatory functions of the FRC. The consultation period closes on 10 June.
§ Mr. Austin MitchellTo ask the Secretary of State for Trade and Industry what plans she has to cap auditor liabilities; what representations she has received on this from(a) audit firms, (b) professional bodies, (c) the European Commission and (d) academics; and if she will make a statement.[109161]
§ Miss Melanie JohnsonThe Government is considering proposals on auditor liability and will consult on its own detailed proposals in due course.
We have not received any specific representations on the question of auditor liability; however, a range of interested parties submitted views to the Company Law Review as part of its extensive consultation process. These are on the public record.