|Previous Section||Back to Table of Contents||Lords Hansard Home Page|
Lord Evans of Temple Guiting: What we do not want to allow is random sampling. We do not want the FRRP to go on fishing expeditions and to approach firms where there is no reason to do so. The point I raised was this: within a group of companies, the FRRP finds a problem with one. It is then told by that company that the problem arises in other similar companies and so it decides to move on. I take the point made by my noble friend that that is not a precise example of the point I sought to make.
Lord Sharman: I have listened with great interest to the Minister. At the beginning of his remarks he had it absolutely right when he said that the bar should be raised just a littleas I have sought to do with my
However, the issue is that of the fishing expedition, and I think we are at one on that. If there is a circumstance with no element of reasonableness in it, then we shall see an exponential explosion in the number of cases that arise. Industry and the FRRP itself will then become bogged down.
The noble Lord said: We are still considering Clause 12. This amendment seeks to address the issue of who should have the principal responsibility for providing information to bodies such as the FRRP. I have started on the premise that the principal responsibility for providing information about the accounts of a company should fall with that company, its board of directors, its officers and its employees. I am not in any way opposed to the notion that the FRRP should also be able to request that the auditors provide information and explanations. I support the provisions allowing the FRRP to request that company auditors provide documentation, because sometimes that may be unavailable from the company itself. However, I do not believe that the FRRP should have unrestricted access to all the working papers of the auditors, which is what this amendment addresses.
Lord Freeman: I support the noble Lord, Lord Sharman. I have no idea what the opposition Front Bench will say about this amendment, but I associate myself with what the noble Lord, Lord Sharman, said for a number of simple, practical reasons. The FRRP is bound to ask a catch-all question of auditors for documents. If the FRRP does not know which documents to ask for, it will ask for all documents, working papers and, indeed, correspondence exchanged with the audit clientthe companyrelating to a specific issue. That is the only way in which a request system can work. The noble Lord, Lord Sharman, is right to say that that presents a problem.
Secondly, when an auditor is preparing documentation, a lot of collateral information is collectedwhat other clients of the audit firm do, for example, in relation to calculating reserves of oil in the ground. If the FRRP requests all documents in relation to accounting treatment on reserves, for example, in the case of one company the auditor will have no chance to make a discretionary judgment but will have to release all the documents, including confidential collateral information which it is unfair to reveal. For those two reasons, I support my noble friend.
Lord Freeman: No, not at all. As the noble Lord, Lord Borrie, will appreciate by studying Clause 12, the auditor has to respond to requests for information and explanations and must reveal all documents that have been exchanged with the company. The amendment tabled by the noble Lord, Lord Sharman, relates only to the internal working papers of the auditor. The provisions in Clause 12 that provide a let-out, which I am sure the noble Lord, Lord Borrie, has already put his finger on, do not go far enough in preventing the problems that the noble Lord, Lord Sharman, talked about.
The restrictions are that it is a defence to say that, as a professional firm, you complete legal professional privilege exemption. That will certainly not apply in many circumstances. The commitment by the FRRP not to pass on documents to third parties does not affect my argument; nor does the defence that documents obtained from the auditors will not be used as evidence in criminal proceedings. So none of those apply or in any way endanger or jeopardise the thrust of the argument made by the noble Lord, Lord Sharman.
Lord Wedderburn of Charlton: With respect, I have not quite understood the grounds of opposition. I understand the problem that it might be thought that this would give rise to requests and that the auditors would have to look into floods of documents. New subsection (3A) would apply to,
On mentioning the Enron shredding problem, I wonder whether the noble Lord, Lord Freeman, did not overlook the fact that subsection (2) of the new clause applies to documents and "information or explanations". By limiting documents in that way, under new subsection (3A), one wonders whether that
Lord Sharman: That may be the inadequacy of my drafting. The reference in subsection (3A) is only to documents. It does not refer to "information and explanations". Therefore, my intentionI think this is what it saysis that the FRRP would be entitled to ask the auditor for any "information or explanations". It is only the documentsthat is, working papersthat I am concerned about.
Lord Hodgson of Astley Abbotts: I have two amendments in this group. Obviously, I listened carefully to the arguments on Amendments Nos. 72 and 79. I came to this point agnostic and listened with interest to the powerful points made. I should like to reflect on whether they are sufficiently strong to put the auditors in a special position.
As I read it, under the Bill as currently drafted, the authorised person may require documents, information or explanations stemming from other companies or sources, which could result in excessive or even impossible demands being placed upon an officer or employee of the company. In theory, for example, an officer or employee could be asked to produce a document belonging to another company to which he has no access. The consequence of not providing the authorised person with the requested document will be an application to the court, under Section 4. The court could require the person to take such steps as it directs under Section 5 for securing the required documents.
If the authorised person wished to gain access to documents from other companies, surely the approach must be made to the other companies. We would like the Government to take that on board as a subset of
|Next Section||Back to Table of Contents||Lords Hansard Home Page|