Ministers to be quizzed by Lords audit inquiry

MARK HOBAN, financial secretary to the Treasury, and Ed Davey, minister for employment relations, consumer and postal affairs at the department for business innovation and skills, will next week give evidence at the final sitting of the House of Lords inquiry into the UK audit market.

The Lords economic affairs committee will, on Tuesday, question the ministers on a range of issues, including how the government intends to improve competition in the audit market, and what lessons can be drawn from the role of bank auditors in the financial crisis.

Following the session, the committee will consider the evidence they have received throughout the inquiry and aim to produce a final report to parliament in the spring, the House of Lords press office said. The government will then publish a response to this report within two months.

Ministers have already revealed some of their views on audit in a response to the EU’s consultation on audit reform that was summarised by a House of Commons committee. The summary said government believed there was not enough scepticism among auditors; that the forced break-up of the Big Four firms could create “unintended consequences”; and that any effort by banks to force clients to use Big Four auditors would be a matter for the competition authorities.

The Lords economic affairs committee has quizzed senior figures at the Big Four and mid-tiers accounting firms, accountancy institutes and former City minister Paul Myners, as part of an exhaustive examination into the impact of the Big Four accountings firm’s dominance of the audit market.

The inquiry has discussed issues including the role of auditors in the banking crisis; quality and reliability of audits; and whether the provisions of management consultancy services to audit clients weakens auditors’
independence.