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Accountancy Firms

Volume 164: debated on Thursday 21 December 1989

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To ask the Secretary of State for Trade and Industry whether accountancy firms who enjoy a monopoly of the external audit function are required to publish their financial statements.

Under section 389(6)(c) of the Companies Act 1985, a body corporate is not qualified for appointment as auditor of a company. Accountancy practices which undertake statutory audit of companies are established as sole traders or partnerships and, as such, are not required to publish accounts. The Companies Act 1989 removes the prohibition on the appointment of a body corporate as auditors and, once section 25 of the Act is brought into force, it will be open to accountants conducting statutory audits to incorporate if they so wish, in which case they will be subject to the statutory duties and responsibilities of companies.

To ask the Secretary of State for Trade and Industry (1) if he will provide a list of the auditing firms which his Department has criticised since June 1979 that have been allowed to make auditing policy through their membership of the auditing practices committee and its working parties;(2) whether any Arthur Andersen personnel have representatives on the accounting standards committee or its working parties, and on the auditing practices committee;(3) whether since 1979 any individuals appointed to the auditing practices committee and its working parties have come from

(a) firms criticised by his Department's inspectors and (b) firms sued for negligence by the Government.

As I explained in the replies I gave on 27 November at columns 92–93, on 13 December at column 702 and on 18 December at column 22 to questions by the hon. Member, membership of the Accounting Standards Committee and the Auditing Practices Committee is a matter for the Consultative Committee of Accountancy Bodies, which has made clear that voting members of those committees are appointed on a personal basis and are not to regard themselves as delegates of sectional interests.