PracticeAudit‘Disclose potential risks’

'Disclose potential risks'

Companies could face demands to disclose key risks in their financial statements if proposals in the company law review are adopted in the wake of the Enron scandal.

Auditors might then be required to report on the companies’ risk report, according to a senior accountancy figure. Peter Wyman, president-elect for the ICAEW told Accountancy Age proposals in the company law review on the operating and financial review should be extended to include a detailed risk analysis. ‘It should set out the central, potentially business-busting risks associated with the company,’ he said. ‘We then need to debate the extent to which auditors are responsible for the content of the OFR.’ As an interim step, Wyman called on companies to consider voluntarily disclosing the key risks inherent in their businesses.

Separately, Neil Lerner, the chairman of the ICAEW’s ethics committee, yesterday set out details of the new system of regulation in the UK as part of a hearing organised by the US Securities & Exchange Commission.

This followed on from earlier private discussions between the institute and SEC chairman Harvey Pitt where Lerner, Wyman and institute president Michael Groom emphasised the different national regimes under which auditors were expected to operate.

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