Measures to secure the objectivity of auditors are among the subjects for investigation by the the Commons trade and industry committee which has launched their own inquiry into the government's white paper on modernising company law.
Link: Company law special report
MPs have sent out a questionnaire of all the main issues they want to cover, including the minimum requirements needed to ensure the independence of auditors.
The committee asked: ‘Should company law require the circulation of auditors or the prohibition of non-audit work, or should these be left to self-regulation by the accountancy profession?’
They also want to know what the sanctions should be for any breaches of accountancy standards and the full extent to which the duties of directors should be spelt out in statute.
The committee intends to cross-examine witnesses on Tuesday and Thursday next week and has taken written submissions for its inquiry.
The DTI is already conducting its own review of auditing and accounting standards, including an early review of the work of the Accountancy Foundation, the watchdog for the industry.
Among the proposals in the consultation documents is a measure to transform the Foundation’s focus making it concentrate solely on audit with a further suggestion that it should look only at the audits of publicly listed companies.
Funding of the Foundation is also examined in the consultation document opening the door to proposals that the watchdog should be paid for directly by government rather than the accountancy institutes as is presently the case.