PracticeAuditRegulators failed to watch over Big Four during crisis, say Lords

Regulators failed to watch over Big Four during crisis, say Lords

Lord Lawson puts the boot into the FRC and FSA over their failure to communicate adequately with the Big Four

CITY REGULATORS “were asleep on the job” during the banking crisis, and failed to adequately watch over the Big Four auditors, a House of Lords inquiry heard today.

Former chancellor Lord Lawson (right), sitting on the economic affairs committee, accusedLord Nigel Lawson the audit profession’s two principle regulators, the Financial Reporting Council (FRC) and the Financial Services Authority (FSA), of failing to direct and communicate regularly with auditors before a number of financial institutions collapsed.

“You were asleep on the job, and to the extent you were half-awake, your eyes were not on the ball,” said Lord Lawson.

Regulators were unable to reveal how many meetings they had with auditors of major banks in the lead-up to, and during, the crisis.

In response, Sally Dewar representing the FSA said it was mainly the responsibility of auditors to highlight issues to the regulator.

“We absolutely should have had a two-way dialogue with auditors,” said Dewar.

baroness-hogg-1Baroness Hogg (pictured), FRC chairman, said she would like to see all auditors licensed by the council as a means to bring in greater disciplinary options to help regulate the industry.

At present, auditors are licensed by professional bodies – a situation which was criticised at the hearing.

The committee will hear from Big Four auditors in a future hearing, and likely to be questioned on their failure to ring alarm bells in the lead-up to the crisis.

(Lord Lawson photo by TVO Photos Flikr photostream)

Related Articles

The future of the audit industry: From masses of data, to meaning

Audit The future of the audit industry: From masses of data, to meaning

1y Acccountancy Age
Deloitte scoops GSK 'mega audit' from PwC

Audit Deloitte scoops GSK 'mega audit' from PwC

1y Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

1y Kevin Reed, Writer
BDO appointed new auditor of Game Digital as Deloitte ditched

Audit BDO appointed new auditor of Game Digital as Deloitte ditched

1y Stephanie Wix, Writer
Eight landmarks in the history of accountancy

Accounting Standards Eight landmarks in the history of accountancy

1y Acccountancy Age
BDO's 'agility' makes it well placed to succeed - Eagland

Accounting Firms BDO's 'agility' makes it well placed to succeed - Eagland

1y Kevin Reed, Writer
Friday Afternoon Live: Discussing the aims and intent of Connolly-driven CogitalGroup

Accounting Firms Friday Afternoon Live: Discussing the aims and intent of Connolly-driven CogitalGroup

1y Kevin Reed, Writer
Leader: Why Connolly's new venture is unlikely to chase Big Four; or follow failed consolidator model

Accounting Firms Leader: Why Connolly's new venture is unlikely to chase Big Four; or follow failed consolidator model

1y Kevin Reed, Writer