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Companies Bill [Lords]

No, I am saying that the Solicitor-General, in a different guise, successfully defended some of the many prosecutions that were brought, but that he, from his own anecdotal experience, can talk about one that most definitely did succeed. However, I doubt whether it was the only one that succeeded. The provision will be used, and we legislate with the intention of using the legislation. If we accepted the amendment tabled by the hon. Member for Putney, which would insert the phrase ““dishonestly or fraudulently””, it would make the offence redundant. If an auditor behaves dishonestly or fraudulently, they are already guilty of an extant criminal offence. This is a useful new offence that will have a positive economic impact, without imposing additional burdens on those who act in good faith in carrying out their duties. We think that it is right to have that sort of legal sanction in such cases. I hope that the hon. Member for Putney will withdraw the amendment, now that we have shown yet again that her concerns are not really justified. I turn now to the amendments from my hon. Friends the Members for Newcastle upon Tyne, Central and for Great Grimsby (Mr. Mitchell). Amendments Nos. 684 and 686 are aimed at ensuring the independence of auditors from the companies that they are auditing. Amendment No. 684 would prevent a company from employing its auditor for any work other than the audit, while amendment No. 686 would require the rotation of auditors every five years. We entirely agree that the independence of auditors is absolutely essential, but we also have a responsibility to avoid unnecessary regulation. Tightening the regulation on auditors often ends up imposing significant costs on companies. However, over the past few years, particularly since the collapse of Enron and WorldCom, the structures in the UK within which auditors operate have been strengthened in a number of ways. We removed responsibility for auditing standards on independence from the professional bodies and passed it over to the independent Auditing Practices Board of the Financial Reporting Council. Moreover, only a couple of years ago the APB issued ethical standards on auditor independence that impose strict duties on auditors to monitor and deal with any threats to their independence. In particular, they must avoid doing other work for an audit client if that would result in their effectively having to audit their own work.