06:56 ET<\/span>
\n<\/span><\/p>\nA House of Lords committee has accused auditors of leading banks and other companies of “complacency” and “dereliction of duty” in the run-up to the financial crisis.<\/p>\n
The Lords Economic Affairs Committee examined the role of auditors KPMG, Deloitte, Ernst & Young and PWC. <\/p>\n
It said the four dominate the market, auditing 99% of the UK’s top companies.<\/p>\n
It called for the Office of Fair Trading to carry out a detailed investigation of the market.<\/p>\n
The committee said the breakdown of dialogue between bank auditors and regulators made the financial crisis worse.<\/p>\n
“Auditors were either unaware of the mounting dangers in the banks or, if they were aware, failed to alert the supervisory authority,” the committee’s report stated.<\/p>\n
“The paucity of meetings between bank auditors and the supervisor was a dereliction of duty by both auditors and regulators.”<\/p>\n
The BBC’s chief economics correspondent, Hugh Pym, describes the report as hard-hitting.<\/p>\n
The Institute of Chartered Accountants in England and Wales (ICAEW) said it did not accept the committee’s view that auditors contributed to the severity of the financial crisis. <\/p>\n
“They did the job that they were expected to do – provide an audit opinion on banks’ financial statements,” said ICAEW chief executive Michael Izza.<\/p>\n
However, he acknowledged that auditing had to “evolve to continue to meet the needs of the market and society”.<\/p>\n
“For example, the Bank of England and the Financial Services Authority working with the profession has developed a draft code of practice for two-way dialogue between auditors and supervisors. <\/p>\n
“Putting this dialogue on a statutory footing is one of the key recommendations in the House of Lords report and is a great example of supervisors and the profession working together to make constructive improvements.”<\/p>\n<\/p><\/div>\n<\/p>\n
Continued here:
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