MG Rover's legacy could be new legislation that shines a light on the network of interwoven relationships between auditors, companies and their directors.

The measures, under consideration by the Department of Business, Innovation and Skills, follow a long-running post mortem into collapsed British car maker MG Rover.

Under the new measures, directors will have to reveal their connections with the external auditor through other companies in which they have a material interest.

A BIS spokeswoman said the department would investigate the issue. "The department will accept the recommendation to review the regulations on disclosure of auditor remuneration," she said.

The issue was first raised last week by corporate watchdog the Financial Reporting Council (FRC), which is investigating Roverís external auditor Deloitte.

In its financial statements MG Rover said it paid Deloitte £21.3m in non-audit work. However, in a report, commissioned by BIS, the same non-audit price tag was found to be £28.8m.

The FRC said the £28.8m figure likely included fees paid to Deloitte by companies or partnerships in which directors had a significant interest. The Companies Act does not require this information to be disclosed.

New legislation would have the potential to pull back the curtain on the web of relationships between an auditor, its client and directors within that company.

Outgoing FRC chief executive Paul Boyle, speaking before his departure last Friday, said it was an area that needed attention. "The whole debate surrounding non-audit services is about the work they do for the management and directors adversely affecting their ability to make independent judgments," he said.

"The Rover report has revealed a very interesting issue when the audit firm is doing work for other companies that the directors have a material interest in… This is another dimension of the relationship between auditors and directors which perhaps hasn't had enough focus."

Audit firms already face possible curbs on their non-audit work by another review recommended by the Treasury Select Committee in the wake of the crisis, which is being conducted by the Accounting Standards Board. Allister Wilson, audit partner at Ernst & Young, said there were a series of reviews into the subject.

"The whole issue of providing better transparency and disclosure around non-audit fees is something we fully support," he said. In its May 2009 report into the banking crisis the Treasury Select Committee said further restrictions would lead to greater trust between investors and auditors.

Further reading:

FRC chief Boyle bows out with no regrets

As Boyle steps down audit is at a crossroads