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Companies Bill [Lords]

In speaking to amendments Nos. 439 and 440, I return to the subject of the auditor offence proposed in the Bill. At this point, I declare an interest: I am a chartered accountant, as I pointed out yesterday, and I spent my formative years as an accountant auditing a wide variety of companies, many in Britain and some in other European countries. Clause 521 will enable an auditor to be prosecuted if he or she has acted knowingly or recklessly to cause"““a report under section 509…to include any matter that is misleading, false or deceptive in a material particular””." In Britain, about 700,000 audits are carried out annually. To my knowledge, they are carried out professionally, and largely show no indication of behaviour by auditors that would need to be tackled by the proposed new criminal auditor offence. As my hon. Friend the Member for Huntingdon (Mr. Djanogly) noted yesterday, we have debated the proposals not only in the House, but at a breakfast briefing in the City last week. At that event, I challenged the Minister for Industry and the Regions to tell us how many auditors she believed would be prosecuted under the new offence. I hesitate to put words in her mouth but, from memory, she suggested that there would be only one or two auditors whose behaviour would have to be dealt with via the offence. That sounds like taking a sledgehammer to crack a nut, especially given the existing law on negligence and fraud.