THE CHAIRMAN of the House of Lords Economic Affairs Committee said he is “disappointed” with some of the government’s response to its recent audit report.
Ministers rejected the key recommendation of mandatory dialogue between bank auditors and regulators. The government said it “is not persuaded that there is a strong case for additional legislation in this area” because the Bank of England has not called for statutory dialogue.
Despite this, Lord Macgregor (pictured) said the committee was “pushing at an open door” when it came to establishing regular communication between the relevant parties, saying the Bank is “well aware of the importance of such dialogue”.
MacGregor said the report enjoyed “a good reaction from those who responded publicly”, pointing to one Big Four firm that has already put in place a partner charged with corporate responsibility. He was pleased that the Office of Fair Trading acted upon the recommendation to investigate the audit market, and that the government was also in favour.
“We have pushed the debate forward and the government have come a long way with us, as have the OFT,” he said.
He played down the government’s rejection of the finding that International Financial Reporting Standards reduced auditors’ scope for prudence, saying the conclusion was “secondary to the more important goals of mandatory dialogue and an OFT investigation”.
The next stage will be a debate in the House of Lords later this summer. MacGregor said he was confident the issue of mandatory dialogue will be re-examined, and said legislatory pressures might be keeping it off the agenda for now, but the subject is by no means closed.
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