'If in the case of any group or other accounts of a company the requirements of section 54 or 56 above are not complied with, it shall be the duty of the auditors of the company by whom the accounts are examined to include in their report on the balance sheet of the company, so far as they are reasonably able to do so, a statement giving the required particulars:.—[Mr. Eyre.]
Brought up, and read the First time.
With this it will be convenient to take Government amendment No. 293 and amendment No. 91, in page 67, line 14, at end add— '(8) If in the case of any such accounts as aforesaid the requirements of this section are not complied with, it shall be the duty of the auditors of the company by whom the accounts are examined to include in their report on the balance sheet of the company, so far as they are reasonably able to do so, a statement giving the required particulars'.
I beg to move, That the clause be read a second time.We have tabled the clause in response to a helpful suggestion made by the Consultative Committee of Accountancy Bodies. Its effect is to place a duty on auditors to include in their report a statement giving the particulars of any loans and other transactions of the kinds described in part IV of the Bill, such as quasi-loans and credit transactions, which have not been disclosed in the accounts. The disclosure provisions in clauses 54 and 56 are intended to replace section 197 of the Companies Act 1948, but they do not at present include a provision replacing subsection (3) of that section. That subsection goes further than the general requirement on auditors to qualify their report it any information required by statute to be included in the accounts is not so included, as it places a duty on them actually to supply, as far as possible, the missing information required to be included by section 197 in a separate statement in their report. The subsection can therefore serve to discourage directors and officers from attempting to withhold the information in the first place. As we regard the new disclosure provisions as an important policing mechanism for the general prohibitions in part IV, we consider that, by maintaining this duty on auditors, the disclosure provisions will be that much more effective. The clause therefore repeats the wording of section 197(3), though extending the new provision to group accounts and to all the disclosure requirements of sections 54 and 56. We recognise that the intention of amendment No. 91 is very similar to that of our new clause 21. The scope of amendment No. 91 does not, however, extend either to group accounts or to the additional disclosure provisions in clause 56—that is, disclosure of loans to officers, and aggregate disclosure of loans to directors of recognised banks. We believe that this wider coverage is desirable and that the new clause is, therefore, preferable to amendment No. 91. I hope that Opposition Members will recognise that we have accepted the principle of amendment No. 91 in our new clause and will feel able to withdraw the amendment.
I will put the Minister out of his misery at once by telling him that there will be no Division on the clause.I am delighted to see here the hon. Member for Folkestone and Hythe (Mr. Costain). He takes such an interest as Chairman of Committees and in many other matters. I am anxious to know what he is interested in today. I readily agree that the clause is an improvement on our drafting in amendment No. 91. It is amazing how valuable are the parliamentary draftsmen from time to time. We are all agreed about the principle, and I agree, therefore, that the new clause is to be preferred. I welcome the addition that is being made to the Bill.
May I thank the hon. Gentleman for his tribute to the parliamentary draftsmen?
Question put and agreed to.
Clause read a Second time, and added to the Bill.