Local Audit and Accountability Bill [HL]

Lord Beecham Excerpts

Monday 24th June 2013 Grand Committee

[Lord Wills]

I am very grateful. My noble friend reinforces the point about the pathetic nature of the Government in accepting these arguments about increased audit fees. They really need not be there. These auditors are getting access to a very lucrative new stream of work and they should pay the price to the public in making information available.

[Lord Beecham]

Before my noble friend withdraws the amendment, what is the present position when a contract is let by the local authority for a particular service in terms of the audit? What is the relationship of the district auditor to a council-commissioned contract in relation to its own service? Does he have access and is he subject to the same disclosure requirements that my noble friend seeks as if the council itself were directly providing that service?

[Lord Wallace of Saltaire]

My clear understanding is that auditors do have access to the relevant accounts of the contractor, but that would probably differ a great deal from one contract to another. I therefore need to make sure that in saying that they have access I am talking about all the cases rather than some. It may well be that a number of contracts differ one from the other.

--- Later in debate ---

[Lord McKenzie of Luton]

I understand that; we have been through that before. I can see that it would not be the norm, but if there is no ability to give indemnity on some basis, what if we have a repeat of risks of the Westminster council sort, and 14 years of litigation? I accept that we are in a different era, but on technically complex issues, will that not discourage auditors from issuing that report?

[Lord Beecham]

If I might add to my noble Friend’s question, will that not deter smaller firms from engaging in the tendering process?

[Baroness Hanham]

My Lords, I am not sure that the Westminster case is very helpful now. We are a very long way down the line. As others will know, it was not a straightforward case by any stretch of the imagination. The legal action was taken to recover the surcharge, so it was not only to do with the report, but with trying to surcharge the councillors.

If the company concerned appoints an auditor, it has to stand behind them as well. That would be the expectation of indemnity in this case. I am sure it will not be unique to a company to have to do that. With regard to small auditors, the situation would remain the same. They would presumably cover themselves for the risks.

I hope the explanation is sufficient. If not, and the noble Lord has other points that I have missed, perhaps we can pick them up by correspondence.