In May 2009 the Treasury Select Committee published a report entitled ‘Banking Crisis: reforming corporate governance and pay in the City'. In this report the Committee called for the appropriateness of the provision of non-audit services by auditors to the entities that they audit to be revisited, saying: "We strongly believe that investor confidence, and trust in audit would be enhanced by a prohibition on audit firms conducting non-audit work for the same company, and recommend that the Financial Reporting Council consult on this proposal at the earliest opportunity".

In response to the Treasury Select Committee's recommendation, the APB has today issued a Consultation Paper providing relevant background information and inviting views on this important issue.

The consultation paper does not address issues specific to individual non-audit services. For example, in the light of recent market developments, the APB is currently reviewing its existing Ethical Standards relating to audit firms jointly providing internal and external audit services and the FRC’s Audit Inspection Unit is considering the application in its ongoing monitoring work of APB’s current standards relevant to this issue.

Richard Fleck, Chairman of APB commented:

"The question of whether restrictions should be placed on the non-audit services that auditors can provide to the entities they audit was a key issue at the time of the Enron debacle in 2002. Since then there have been a number of developments including greater involvement by audit committees in overseeing what non-audit services are provided, greater transparency on the fees paid for non-audit services and the issuance by the APB in 2004 of Ethical Standards for Auditors which prohibit a number of non-audit services from being provided in certain circumstances. The aim of the APB Consultation Paper is to seek views, especially from investors, on whether there is support for the Treasury Select Committee’s view that investor confidence and trust in audit would be enhanced by a prohibition on audit firms conducting non-audit work for the same company.”

A copy of the Consultation Paper may be downloaded free of charge from the publications section of the APB’s web site: (http://www.frc.org.uk/apb/publications/pub2123.html).

1. The Financial Reporting Council (FRC), the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. Its functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the FRC Board. The Committee on Corporate Governance assists the Board in its work on corporate governance.
2. The APB is committed to leading the development of auditing practice in the United Kingdom and the Republic of Ireland so as to:
   1. establish high standards of auditing;
   2. meet the developing needs of users of financial information; and
   3. ensure public confidence in the auditing process.
3. 3. All press enquiries should be directed to: Jon Grant on Tel: 020 7492 2410 or Richard Fleck on 07785 350226 or Paul George on 020 7492 2340.