A European Commissioners (EC) response to a
House of Lords (HoL) committee inquest on audit reform proposals
has been met with scepticism.

Lord Lawson told the International
Accounting Bulletin
certain EC proposals being defended by EC
internal markets director general Jonathan Faull were “inadequate
and present severe weaknesses”.

The HoL committee was questioning Faull over
the EC audit reform proposals in a follow up to its own report on
the state of affairs in the UK audit market, which is being
investigated by the UK Competition Commission.

Lawson, a former UK Chancellor, said Faull
“did not answer to a single question” and was disappointed that the
EC proposals did not contain a statutory obligation for regulators
and bank auditors to improve communication lines.

Faull said this was because “we found that the
dialogue between auditor and regulator should be left to their
discretion”.

Lawson’s frosty feedback was shared by Lord
Smith of Clifton who said Faull’s answers “are those you would
expect from a Eurocrat”.

When asked whether he perceived a conflict
between UK audit market’s needs and the EU proposals, Smith said
“at this time European consensus is difficult to find anyway,
because of the eurozone troubles”.

Smith said the eurozone crisis has impacted on
the audit reform discussion and “audit proposals are being watered
down because the EU has now other priorities, although the
proposals are linked [to the financial crisis]”.