THE CHANCELLOR has said the relationship between government and the big bank auditors needs to be closely examined, in the wake of controversial revelations about auditors in the lead up to the government bailout.
George Osborne was before the economic affairs committee to answer questions on the economy but made his comments when members took the opportunity to guage his views on auditors.
Lord Forsyth said the committee has been told by auditors from the Big Four that they signed off on the accounts of the banks during the crisis because they had been told by government they it would bail out the banks. Lord Forsyth said this was “rather awkward” for shareholders who saw only the accounts signed off by auditors. He suggested this needed probing further.
The chancellor agreed and suggested that shareholders should be supplied with more information: “I completely agree with that, and of course one of the things that I think everyone is agreed on is that we have to somehow make sure that shareholders have more information and feel more empowered to exercise their role as owners of these banks.”
He added: “There are of course many small shareholders in our banks. If they don’t get proper information about what these large institutions are up to, they will find it more difficult to exercise the right that they have as a part-owner of the bank.”
The Lords committee is waiting for the Big Four firm to explain their communications with government during the crisis. They were questioning the chancellor on Tuesday of last week. Transcripts of the session were only recently published.
The lords have focused on the discussions in the tense days before government support for troubled banks was announced in the closing months of 2008.
Osborne’s comments is likely to put pressure on auditors to justify their actions in the crisis. Auditors have already told the Lords they only offered clean audit reports following secret assurances from government that they would step in should a major bank topple.
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