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Statutory Auditors (Delegation of Functions etc.) Order 2008

rose to move, That the draft order laid before the House on 17 December 2007 be approved. The noble Baroness said: My Lords, the order will renew the delegation of powers to regulate auditors from the Secretary of State to the Professional Oversight Board of the Financial Reporting Council. It replaces the 2005 order under which powers are currently delegated to the Professional Oversight Board. That order was made under the Companies Act 1989. The regulation of audit was reformed between 2002 and 2005 in response to corporate scandals such as Enron. Both the 2005 delegation order and the 2006 EU audit directive require independent oversight of the professional accountancy bodies' regulation of auditors. Some adjustments to the existing UK audit regime are needed to comply with the audit directive and a new delegation order is needed to reflect those changes. It is also required to reflect changes in the corporate structure at the Financial Reporting Council. To be appointed as a statutory auditor of a UK company, an individual auditor or a firm must be a member of a recognised supervisory body and be subject to the rules of that body. The recognised supervisory bodies are the accountancy organisations recognised by the Professional Oversight Board. An important role of the board is to approve those bodies and to oversee how they carry out their regulatory work. Under the delegation order, the Professional Oversight Board also has the power to make regulations on the register of auditors, on audit qualifications and on information to be made public by auditors, known as transparency. As a result of the audit directive, the Professional Oversight Board will also be responsible for co-operation with the European economic area and third-country audit regulators, as well as for the registration and regulation of third-country auditors. The delegation order will also have the effect of making the Professional Oversight Board subject to the Freedom of Information Act. The board is currently consulting on its draft publication scheme. There has been a full consultation on this order and no concerns have been raised. I commend the order to the House and I beg to move. Moved, That the draft order laid before the House on 17 December 2007 be approved. 6th Report from the Joint Committee on Statutory Instruments.—(Baroness Vadera.)