Labour welcomes an independent report on reforming the
accountancy industry
The report, by a group of experts led by Professor Prem Sikka,
includes recommendations that:
- A statutory state-backed body must be created to conduct real
time audits of banks, building societies, credit unions, insurers
and major investment firms.
- It should be a criminal offence for statutory auditors of large
companies and any entities related to them to offer or perform
non-auditing services for audit clients.
- Large companies must be required to change audit firms,
partners and entire audit staff at least once every five years.
- An independent body to be created to appoint and remunerate
auditors for all non-financial sector large companies, as defined
by the Companies Act 2006.
- Big four firm share of the audits of FTSE 350 companies must be
capped at 50% of that market.
- There must be personal liability for audit failures upon
partners responsible for audits.
MP, Labour’s Shadow
Chancellor, said:
"The collapse of Carillion and BHS highlighted the catastrophic
failure and inadequacy of our regulatory system.
"A lack of openness, transparency and accountability means nobody
ever seems to be punished for their transgressions.
"The Government has shown no interest in tackling the accounting
and auditing shortcomings which led to the banking crash ten
years ago. Our regulatory system is simply not fit for purpose.
"Under the next Labour government the big six firms will not be
allowed to drive down standards or continue to act like a cartel
that prevents new market entrants.
"We are grateful to Professor Sikka and his team for shining a
light on the problem and will look closely at the recommendations
of this report."
Ends
Notes to editors:
