Statement following Parliamentary Commission on Banking Standards report into failure of HBOS
News types: Generic Announcement
Published: 10 April 2013
The FRC will consider the report from the Parliamentary Commission on Banking Standards and the forthcoming PRA report to identify whether there is a case for an investigation under our powers.
As the FRC and government made clear during the reform process, the FRC is committed to robust, rigorous and timely action.
We are in touch with the PRA about their work as it develops. The FCA and PRA have access to information from companies’ books and records that we could not obtain under our powers and therefore it is necessary for us to work closely with them to build a full picture.
If there is evidence that financial statements were misleading, and there were deficiencies in the audit, we would take this as a basis to launch an investigation into potential misconduct under our powers.
As we told the Treasury Select Committee in 2009, our enquiries had not shown evidence of an audit failure. We gave further evidence on this to the House of Lords Economic Affairs Committee.
That does not mean there is no reason to change the way banks report and their audits are conducted. Since 2010 we have launched the Sharman Inquiry and are consulting on the detailed proposals on going concern, we have changed the Corporate Governance Code to include more requirements on companies for their corporate reporting and included requirements for fuller audit committee reports and the quality of those reports. Other measures include extending the scope of our audit inspection work and providing more transparency in its findings. At heart these changes are designed to help ensure corporate reporting gives early warning of emerging risks.
As the FRC and government made clear during the reform process, the FRC is committed to robust, rigorous and timely action.
We are in touch with the PRA about their work as it develops. The FCA and PRA have access to information from companies’ books and records that we could not obtain under our powers and therefore it is necessary for us to work closely with them to build a full picture.
If there is evidence that financial statements were misleading, and there were deficiencies in the audit, we would take this as a basis to launch an investigation into potential misconduct under our powers.
As we told the Treasury Select Committee in 2009, our enquiries had not shown evidence of an audit failure. We gave further evidence on this to the House of Lords Economic Affairs Committee.
That does not mean there is no reason to change the way banks report and their audits are conducted. Since 2010 we have launched the Sharman Inquiry and are consulting on the detailed proposals on going concern, we have changed the Corporate Governance Code to include more requirements on companies for their corporate reporting and included requirements for fuller audit committee reports and the quality of those reports. Other measures include extending the scope of our audit inspection work and providing more transparency in its findings. At heart these changes are designed to help ensure corporate reporting gives early warning of emerging risks.