PracticeAccounting FirmsPenrose refuses to comment on E&Y

Penrose refuses to comment on E&Y

Lord Penrose, the author of the report into the near collapse of Equitable Life, has refused to comment on the competence of Ernst & Young, former auditor to the embattled life assurance firm.

Link: Equitable Life special report

Facing a grilling in front of the Treasury Select Committee today, Lord Penrose said he could ‘not comment on what the auditors should or should not have done’ despite repeated questions from MPs.

‘I have set out my understanding of what the auditors knew as a matter of fact,’ Lord Penrose said. ‘To say auditors should have done something is to say that there was some statutory duty.’

He went on to say that an ‘accounting surplus that had been thrown up’ led to returns promised to policyholders in 1987 exceeding the assets of the Society.

Treasury minister, Ruth Kelly who faced the same committee as Lord Penrose, reiterated the government’s stance that no compensation will be paid because the report had offered ‘no evidence whatsoever of any maladministration’.

Instead Kelly blamed ‘corporate governance failures’ which the government intends to address through the Accounting Standards Board’s review of the life assurance industry.

‘Clearly we have set their remit,’ said Kelly. ‘We have asked for the review to be reported by the Spring of next year.’

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