In a letter seen by Accountancy Age, deputy comptroller and auditor general Tim Burr has assured Labour accountant MP Harry Cohen that the letters would only become a charge on the accounts if the potential liability set out in the letters crystallises. He said that ‘at this point in time’ they were only required to be noted in the accounts of the issuer.
The letters cover the three infrastructure companies now maintaining the Jubilee, Northern and Piccadilly lines, the Bakerloo, Central and Victoria lines and the sub-surface District, Circle and Metropolitan lines.
Burr told Cohen: ‘The 2001-02 resource accounts of the department for transport, local government and the regions disclosed potential financial liabilities arising from the issue of letters of comfort and guarantees to third parties. As part of our audit of the department for transport’s 2002-03 resource accounts, we will be seeking to ensure that there is full disclosure of all potential liabilities arising from such letters and guarantees.’
He said the NAO was ‘also looking into whether these deals can be made to work effectively and whether they were a good deal for the taxpayer’.
Cohen believes that far from being an assurance against remote possibilities there is a very real possibility that the potential liabilities will become actual. He hopes the investigation will reveal the extent to which this is the case if there are further severe operational difficulties on the Central line, recently reopened after the Chancery Lane derailment last January, and elsewhere.
The second largest improvement in ‘significant’ levels of financial distress since the EU Referendum was in professional services, found research from Begbies Traynor
Two new audit partners have been appointed at the firm BDO in its audit practice following continued growth and investment
Investment in people, tech and businesses impacts on EY's profit per partner figure
If businesses do not take cyber security seriously in their business planning regulators may do it for them, the ICAEW has warned