Company Law Reform Bill [HL]

moved Amendment No. A240A: "Page 390, line 24, at end insert ““of a company designated by the Treasury””" The noble Baroness said: In moving Amendment No. A240A, I wish to speak also to Amendment No. A240B, both of which are directed at defining the companies that the Auditors General will be allowed to audit once the Bill is law. The amendment has been suggested to us by the Institute of Chartered Accountants in England and Wales. The Minister will be aware that the main focus of the report of the noble Lord, Lord Sharman, which we understand to be the driving force behind Chapter 3, was that the C&AG should be able to audit non-departmental public bodies or their subsidiaries when they are formed as companies. The noble Lord’s report went a bit wider than that and suggested a small number of types of company that could also be audited by the C&AG, but the Government said at paragraph 2.21 of their response that they, "““do not in general believe that it is appropriate for the C&AG to audit companies which are in the private sector””." We broadly agree with that approach. If nothing else, the entry by the auditors general into the private sector audit market could raise issues of unfair competition given that Auditors General are financed by public funds and do not have to make profits or equivalent surpluses. But the Bill has surprisingly allowed the Auditors General to audit any company without restriction. My amendments, which are probing for the purpose of this Committee, say that the Treasury must designate those companies which may be audited and that that must be done by order—to which the Minister will note I have assigned the lowest grade of parliamentary process; namely, the negative resolution procedure. Whether the Treasury is the right body in relation to the devolved administrations, I do not know, but I do not think that matters for today’s Committee which seeks to test the principle of giving the Auditors General an unrestricted ability to act. The Minister may well reply that there will be a series of self-denying ordinances from the Auditors General but I am sure that he will not regard that as satisfactory. For very good reasons, Auditors General are independent of the Government and so the Government’s view on their scope of action will be irrelevant once this Bill is law unless there is some additional power or restriction contained within the Bill. I beg to move.