Asked by: Baroness Bowles of Berkhamsted (Liberal Democrat - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty's Government, further to the Written Answers by Lord Callanan on 20 May (HL27 and HL31), by what authority the UK Endorsement Board is endorsing accounting standards under its duties in secondary legislation without considering the primary legislative framework in which those standards sit; and when was such authority (1) given, and (2) by whom.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
Regulation 5 of the International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/685) gave the Secretary of State the responsibility to adopt international accounting standards, with a view to harmonising the financial information presented by companies preparing accounts required by section 403(1) of the Companies Act 2006. This responsibility was delegated to the UK Endorsement Board via the International Accounting Standards (Delegation of Functions) (EU Exit) Regulations 2021, which was approved by Parliament and came into force on 22 May 2021. The delegation also includes the requirement to abide by the basis for adoption of international accounting standards set-out in Regulation 7 of SI 2019/685.
Asked by: Baroness Bowles of Berkhamsted (Liberal Democrat - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty's Government, further to the Written Answer by Lord Callanan on 20 May (HL31), how systemic such adjustments are if audited accounts are merely a “starting point“; and whether the result of companies having to do that has been subject to an impact assessment in terms of (1) burdens on business, and (2) the risk of hiding insolvency.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
Companies calculate their distributable profits under Part 23 of the Companies Act 2006, and as such, it is an individual decision at the company level as to whether to make a distribution.
An impact assessment on the Companies Act 2006 was published in January 2007 and is attached to this response.
Asked by: Baroness Bowles of Berkhamsted (Liberal Democrat - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty's Government, further to the Written Answer by Lord Callanan on 16 September 2020 (HL7849), which version of the International Financial Reporting Standards (IFRS) framework is applicable to directors preparing International Accounting Standards (IAS) accounts given that (1) the (a) EU, and (b) UK Endorsement Board, have not endorsed any framework, and (2) the EU adopted international accounting standards at the end of the transition period on 31 December 2020 which are not legislation and do not include any framework.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
The Companies Act 2006 (the Act) requires UK-registered companies which use international accounting standards when preparing their accounts to use UK-adopted international accounting standards. UK-adopted international accounting standards are defined in Section 474 of the Act as the international accounting standards which are adopted for use within the United Kingdom by virtue of Chapter 2 or 3 of Part 2 of SI 2019/685. These are any international accounting standards endorsed by the EU as at the end of the EU Exit transition period, and any subsequent UK adoptions of international accounting standards by the Secretary of State or, following the delegation of this function, by the UK Endorsement Board. A consolidated text of UK-adopted international accounting standards can be found on the UK Endorsement Board’s website.
Asked by: Baroness Bowles of Berkhamsted (Liberal Democrat - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty's Government why an advertisement for the appointment of a Chair for the UK Endorsement Board appeared on the Cabinet Office website on 15 December 2021 but was then taken down before the completion of that process.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
The advert for a campaign to recruit a new Chair to the UK Endorsement Board was published on the Cabinet Office website on 15 December 2021, and remained there until the closing date for applications on 23 January 2022. Campaigns that are not regulated by the Commissioner for Public Appointments are no longer visible to the public on the website after they have closed for applications.
Asked by: Baroness Bowles of Berkhamsted (Liberal Democrat - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty's Government whether Mike Ashley was a serving member of the Accounting Standards Board when he acted as an expert witness to defend PwC against the Financial Reporting Council’s action in respect of PwC’s audit of Mayflower plc; and if so, (1) what assessment was made of whether this constituted a conflict of interest, and (2) whether he offered to resign from the Board.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
Mike Ashley was a serving member of the UK Accounting Standards Board, which was a Board of the FRC, when he acted as an expert witness on behalf of PwC during the Tribunal between the Accountancy Investigation and Discipline Board and PwC. The judgement for this case is available on the FRC’s website (and a copy is attached to this response). The Government does not hold information relating to the procedures of the UK Accounting Standards Board which was a Board of the FRC and ceased operating in 2012.
Asked by: Baroness Bowles of Berkhamsted (Liberal Democrat - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty's Government whether the processes for the recruitment of Seema Jamil O’Neil (1) to the staff of Accounting Standards Board, and (2) to the post of Executive Director of the UK Endorsement Board, in 2021 were subject to (a) public advertising, and (b) open competition.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
The Government does not hold information relating to the recruitment of staff to the UK Accounting Standards Board which was a Board of the FRC and ceased operating in 2012. All permanent posts for staff recruited to the Secretariat of the UK Endorsement Board are subject to public advertising and open competition.
Asked by: Baroness Bowles of Berkhamsted (Liberal Democrat - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty's Government for which years did (1) UK Endorsement Board member Mike Ashley act as the KPMG audit partner of HSBC Holdings plc, and (2) UK Endorsement Board Executive Director Seema Jamil O’Neil act as the Senior Manager for the KPMG audit of HSBC Holdings plc.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
Information from the UK Endorsement Board website explains that Mike Ashley retired as the Partner and the Head of Quality and Risk Management of KPMG Europe LLP in September 2013, having spent about 35 years with the firm and its predecessor firm, Peat Marwick. The Government does not hold information relating to the specifics of Mr Ashley’s role at KPMG.
The UK Endorsement Board operates independently from the Government. BEIS is therefore unable to provide information relating to members of staff, including information on job history, supporting its work.
Asked by: Baroness Bowles of Berkhamsted (Liberal Democrat - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty's Government whether UK Endorsement Board member Mike Ashley, while also a partner of KPMG, had any involvement in the recruitment of Seema Jamil O’Neil from KPMG to the staff of the Accounting Standards Board.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
The Government does not hold information relating to the recruitment of staff to the UK Accounting Standards Board which was a Board of the FRC and ceased operating in 2012.
Asked by: Baroness Bowles of Berkhamsted (Liberal Democrat - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty's Government for which period did (1) Mike Ashley serve as a member of the Accounting Standards Board, and (2) Seema Jamil O’Neil serve as a member of staff of the Accounting Standards Board.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
Mike Ashley was a member of the UK Accounting Standards Board, which was a Board of the FRC, from 2004 to 2010.
BEIS is unable to provide information relating to members of UK Endorsement Board staff, including information on job history, because the UK Endorsement Board operates independently from the Government.
Asked by: Baroness Bowles of Berkhamsted (Liberal Democrat - Life peer)
Question to the Department for Business, Energy and Industrial Strategy:
To ask Her Majesty's Government, further to the Written Answer by Lord Callanan on 16 September 2020 (HL7963) which stated that “calculation of the distributable profits and of a distribution by a public company must be based on the profits of the company as set out in the company’s accounts”, how and when did the discussions of UK Endorsement Board in its adoption of IFRS 17 take that function into account to ensure that accounts of insurance companies are reliable for that function.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
The calculation of distributable profits must take the profits of the company as set out in the company’s accounts as its starting point. However, directors must also take into account additional factors set out in Part 23 of the Companies Act 2006. For example, for certain insurance companies that are authorised under the Solvency 2 Directive this includes the factors set out in s833A. The effect of these additional factors is to ensure that a company may only make distributions out of profits available for the purpose. The UK Endorsement Board is only required to assess international accounting standards against the criteria in Regulation 7(1) in SI 2019/685.