Company Law Reform Bill [HL]

As I explained in response to Amendment No. A245, the clause is drafted on the basis of a two-tier regulatory framework, one of monitoring, and one of oversight. The independent supervisor will contract with a third party to monitor the Auditor General’s statutory audits, with the independent supervisor overseeing that work. We envisage that the professional bodies can be involved in those monitoring arrangements, as they are for other auditors, but obviously that will be subject to consultation. However, the purpose of subsection (4) is to enable the independent supervisor to enter into arrangements with a third party to carry out the supervision arrangements even though an existing relationship exists. While that may appear to compromise his independence, it would only be appropriate for the supervisor to contract with audit firms or auditors that are members of recognised professional bodies; otherwise the supervision of the Auditors General may not be seen to be effective. As this will involve people who can do the job, there is bound to be the potential for an existing relationship. The provision enables the supervisor to ensure that the audit firm contracted to supervise the Auditors General is fully qualified and competent to carry out the supervision and that, as part of its contractual arrangements, there are no existing relationships between that firm and the Auditors General.