VIEW FROM THE HOUSE
As a result of the government’s comprehensive spending review, government departments will have to accept public performance and output targets, and be measured by them. The switch from cash-input planning to performance-output planning is a small revolution in government.
What a contrast with big accountancy firms which have sheltered for too long behind Victorian partnership structures to avoid public accountability.
The time is coming to end their obsession with secrecy. The carrot for this will be the forthcoming limited liability partnership legislation.
In the UK, the privilege of limited liability has traditionally been accompanied by the need for public disclosures. Firms will not be exempt from this.
Additional pressures are building. There is widespread public concern about the conduct of receiverships and liquidations, and about auditor independence, especially as firms are increasingly operating internal audit and accounts departments for their audit clients. In return for LLP, firms will have to publish meaningful information.
Yet accountancy firms enjoy state-guaranteed markets and occupy a special position of trust in corporate governance. They should be required to publish more than the traditional income statement and balance sheet.
They should be required to publish an analysis of their income by sector to audit clients. They should also disclose information about actual or potential conflicts of interest and show where former partners occupy senior management positions in client companies.
Insolvency business should feature performance disclosure. This could include the number of jobs lost/saved, the highest and lowest bid for assets of an insolvent business and the percentage of net assets absorbed by fees. Details of regulatory action against firms, together with any remedial action undertaken, should also be published.
Advancing accountability should have a major concern of the auditing and insolvency regulators. But they have always sided with the producers rather than the public. Only an independent regulator will have the will to keep a firm eye on accountability.
Jim Cousins is Labour MP for Newcastle Central.