Government rejects Lords’ call for mandatory audit dialogue

Government rejects Lords' call for mandatory audit dialogue

The government has rejected a plea for mandatory dialogue between auditors and regulators in its response to the House of Lords report on audit

THE GOVERNMENT has rejected a key House of Lords recommendation calling for dialogue between auditors and regulators to become a legislative requirement.

Chairman of the Economic Affairs Committee Lord MacGregor said the response was “disappointing”, adding: “Legislation mandating regular meetings – for example, every quarter – is the only way to ensure this lamentable near-breakdown in communication between bank auditors and regulators is never repeated.”

The Lords’ report on audit was damning, saying a breakdown in communication amounted to a dereliction of duty and concluding that such dialogue was “of the first importance”.

The government said regular dialogue will result from the Financial Services Authority’s recently issued Code of Practice, which covers the relationship between bank auditors and supervisors. However, the Lords do not agree.

MacGregor said the code “lacks teeth” as it has no statutory backing, meaning regular dialogue is by no means assured.

International Financial Reporting Standards also came under attack in the Lords’ report, but here again the government failed to back up their findings. The committee concluded the use of IFRS limited auditors’ scope to exercise prudent judgement, but the government has denied this assertion.

The full government response will be published this morning. One area where it did support the Lords was on their call for the Office of Fair Trading to investigate concentration in the market, with a possible referral to the Competition Commission.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource