The Parliamentary Under-Secretary of State, Department for
Business, Energy and Industrial Strategy (Lord Callanan) (Con):...I
now move to the oversight of the endorsement board. The board is an
independent unincorporated association supported by a subsidiary of
the FRC via a service-level agreement. This agreement will include
support in the areas of HR, finance and IT equipment to enable the
board to carry out its work. I have already stressed that the
endorsement board’s decision-making...Request free trial
The Parliamentary Under-Secretary of State, Department for
Business, Energy and Industrial Strategy ()
(Con):...I now move to the oversight of the endorsement
board. The board is an independent unincorporated association
supported by a subsidiary of the FRC via a
service-level agreement. This agreement will include support in the
areas of HR, finance and IT equipment to enable the board to carry
out its work.
I have already stressed that the endorsement board’s
decision-making will be independent. However, this does not mean
that it should be beyond the reach of those with wider
responsibilities for the integrity of company reporting. As such, a
key principle of the adoption process will be transparency, with
both the discussions and the outcome of adoption decisions being
made publicly available.
The endorsement board will be accountable to the Secretary of
State for how it performs its delegated functions, and the
Secretary of State will, in turn, lay the endorsement board’s
annual report before Parliament. The board will also report, in a
publicly available document, on its governance and due processes to
the FRC. I should add that the Secretary of State
will also retain the ability to make regulations to amend or
withdraw the delegation if it appears to the Secretary of State
that the delegation is no longer in the public interest.
With the appointment of an interim chair, board members, the
recruitment of a secretariat and adoption of the terms of
reference, we have completed important steps to establish the
endorsement board. The cost of this has been approximately £2
million over the past two years and we expect future ongoing costs
of £2.9 million per year. These ongoing costs will be funded using
the FRC’s levy on preparers of accounts. This will
put the cost of the endorsement board to those who benefit most
from IFRS...
(Con):...I am not really convinced that we
need a quango to endorse international standards—this new UK
Endorsement Board. I understand that it will enable us to make sure
that international standards are not missing a vital dimension and
to reflect UK stakeholders’ needs, as the Minister explained.
However, when you create such a body it will find work to do;
people will want to write strategies and have a work programme. It
will have a comprehensive diversity programme, although I note that
it will be served, on HR, IT and finance, by the
FRC. I would have left the work with BEIS and its
civil servants, some of whom are extremely talented and will no
doubt be conducting the international negotiations on accounting
standards. We have too many regulators...
(Lab) [V]...The Government claim to be “taking back
control”—that slogan has been used quite a few times—but there is
no sign of that in this statutory instrument. In common with the
Financial Reporting Council the newly
created Accounting Standards Endorsement Board will primarily
rubber-stamp the international accounting standards, better known
as the international financial reporting standards, or IFRS. These
standards are produced by the International Accounting Standards
Board—the IASB...
(LD) [V]:...This seems to aptly describe the UK Endorsement
Board. Three were members of the former Accounting Standards Board,
which has approved defective accounting standards in the past.
Several were partners in accounting firms at the time that banks
were collapsing. Mr Ashley, a former ASB member, was also a career
KPMG partner, which the UK Endorsement Board website fails to note.
Of course, KPMG was the auditor of Carillion and HBOS. In the case
of former ASB member Ms Wallace, at least the website references
her connection to PwC, the auditors of Northern Rock, but it is
silent about her time at Arthur Andersen. The board includes
another recent PwC partner, and a partner from Grant Thornton,
which is currently defending itself in connection with the auditing
problems of the collapsed Patisserie Valerie. There is no mention
that board member Kathryn Cearns worked for the ASB and then for
the law firm Herbert Smith Freehills which, as well as providing
defence advice to PwC and KPMG, also instructed the ICAEW’s counsel
to give the dubious true and fair legal opinions for the
FRC, from which the Government eventually
distanced themselves, as I discovered in FoIs. Liz Murrall, an
employee of the Investment Association, and Paul Lee, a consultant
to the Investor Forum, are also on the Endorsement Board, and both
those organisations are dominated by insurance companies, the
accounts of which will benefit from using IFRS 17...
(Lab) [V]:...The Secondary Legislation Scrutiny
Committee drew the SI to the attention of the House. It said that
the UKEB
“will operate as an unincorporated association with support
of the Financial Reporting Council … We
note that these changes will mean additional responsibilities for
the FRC at a time when the FRC itself will be undergoing
transformation into the new Audit, Reporting and Governance
Authority.”
The Parliamentary Under-Secretary of State, Department
for Business, Energy and Industrial Strategy ()
(Con):...Moving on to the points made by the noble Baroness,
Lady Bowles, the conditions of the EU withdrawal Act do not provide
the powers to create a new statutory body to endorse IFRS. The
Endorsement Board is therefore an unincorporated association,
comprising the chairman and the board members. Resources and
funding are provided by the existing body, the Financial Reporting Council The
Endorsement Board has been designed to be accountable and open to
scrutiny by government and stakeholders, and there are statutory
requirements for reporting to the Secretary of State, to the
FRC and to Parliament...
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