Reform Of The Auditing Industry

EDM number 698 in 1992-93, proposed by Austin Mitchell on 29/10/1992.

That this House has no confidence in the standards or regulation of the auditing industry in the light of the rising tide of financial scandals such as BCCI, Maxwell, Polly Peck, Levitt, Mint and Boxed and companies going bust shortly after receiving clean audit reports, such as Barlow Clowes, Bestwood, British Island Airways, Mountleigh, Oakwood, Parkfield, Reliant, Rush and Tomkins, Sock Shop, and Telecomputing; deplores the fact that where auditors should act to protect the public and shareholders too many have been drawn into a collusive relationship with directors by their desire to sell creative accounting, tax avoidance schemes and non-auditing services to companies; feels that the inactive auditing encouraged by the professional bodies is totally inadequate to protect shareholders, depositors, pension fund members and others or defend against fraud; notes that whilst firms such as Price Waterhouse, Coopers and Lybrand, Ernst and Young, KPMG Peat Marwick, Grant Thornton and Pannell Kerr Forster have been criticised for their audit work by the Department of Trade and Industry inspectors, their overall standards of work have never been investigated and none have been debarred from practice by any United Kingdom professional body; therefore suggests that self-regulation means regulation by trade associations which can protect neither the public nor shareholders; notes that this has just demonstrated in the case of Coopers and Lybrand and Polly Peck the inability to discipline, control or regulate the big firms; believes that the auditing industry should be independently regulated; and urges the Government to make early proposals for this.

This motion has been signed by a total of 59 MPs.