Libor Scandal Spurs U.K. Accounting Body to Draft Auditor Advice

The Institute of Chartered Accountants in England and Wales said it will draft guidance to auditors in response to the scandal engulfing Libor and other interbank lending rates.

The guidelines will enable auditors to provide “external assurance” on whether rate-setting is being done properly, the ICAEW said in an e-mailed statement.

External assurance can help provide trust by “testing that there are robust processes in banks for submitting rates to form the benchmark and that those processes are being followed,” the ICAEW said.

Confidence in Libor, the benchmark interest rate for more than $500 trillion of securities, plummeted following Barclays Plc’s admission that it submitted false rates. The revelations have provoked renewed calls for tougher oversight of the financial system and pushed regulatory probes of interbank lending rates to the top of the political agenda.

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