PracticeAuditHewitt highlights need for transparency

Hewitt highlights need for transparency

The importance of open and transparent accounting and auditing was the central theme of a speech by trade secretary Patricia Hewitt to the Association of British Insurers today, as she announced consultation plans for the operating financial review.

Link: Government and FSA commit to OFR

Hewitt also used the platform to discuss the ongoing debate over capping auditor’s liability, although no decision on whether the government will agree to further liability limitations has yet been taken.

The ABI has been one of the most vocal organisations over auditor’s liability and corporate governance over the last few months. Its members account for a huge slice of the investments made on the London Stock Exchange and they take a keen interest in the need for robust and transparent reporting.

As expected, she also announced a consultation on draft regulations for the operating and financial review, which aims to force all quoted companies to include non-financial information in annual reports.

The OFR builds on existing best practice followed by a number of larger companies, and follows the recommendations of the independent Company Law Review.

The consultation will last for 12 weeks and close on the 6 August and details can be found on the DTI website (www.dti.gov.uk)

Hewitt said: ‘The OFR will improve the quality of the reporting and complete the corporate jigsaw to give investors a clearer picture. It will also help the owners of the business better understand their organisations and think about how people perceive them.

The conference was chaired by Sir Derek Higgs, who is responsible for much of the new corporate governance guidelines published by the Financial Reporting Council, and featured guest speakers from companies such as Hermes and Morley, which are both strongly opposed to the introduction of a cap.

It focused on how good governance could attract strong non-executives to join boards and on how to address insurance issues arising from changes in governance.

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