---

Companies Bill [Lords]

I take the hon. Gentleman’s comments on board, but the Government clearly want to broaden the ability to prosecute auditors. My concern is that that will have negative consequences for business and audit that are disproportionate to the number of offences that will be prosecuted under the new provisions. That is important, first, because more audit opinions will be qualified. Auditors will require a significantly higher risk threshold to be passed before they can be comfortable in stating that accounts are true and fair. For some companies—in respect of going-concern issues, for example—the provision could be a self-fulfilling prophecy if auditors are forced unduly to highlight such matters by qualifying an audit report when, in reality, they might have been perfectly happy with assurances from management about the going-concern nature of the company. In fact, we are putting at risk the fine judgments made by auditors, because instead of looking at the facts in front of them, they will constantly be looking over their shoulders at the offence. Secondly, audits will take longer because more issues will need to be followed up, and in more detail. I note that later amendments propose that filing time limits for some companies should be shorter. The offence would put considerable strain on the potential for that. At present, when auditors come across a matter that seems to be unusual or anomalous, they have to make a judgment whether, and to what extent, they should follow it up.