Sir Bryan Nicholson, head of the revamped Financial Reporting Council, told a City audience on Monday that he would establish a committee to review the report by Nigel Turnbull.
The review is widely expected to result in a new obligation for auditors to examine a company’s internal controls and risk management. Such a move would represent a fundamental shift for UK auditors and bring them into line with the Sarbanes-Oxley Act.
The Turnbull report, published at the end of 1999 and still widely respected, is now deemed to be out-of-date due to recent far-reaching changes to management responsibilities in the UK, Europe and the US.
Peter Wyman, former ICAEW president and partner at PricewaterhouseCoopers, said: ‘ The UK simply cannot get left behind on such an important issue as internal controls. It’s quite a radical next step.’
Any changes are likely to result in a mixed reaction from business, particularly among smaller listed companies. But for others, namely those with a US listing, the amendments are not expected to cause significant volumes of extra work.
ICAEW president David Illingworth welcomed the initiative – but said the UK did not need ‘a knee-jerk reaction’.
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