The Stock Exchange is expected to back-pedal on the introduction of its new corporate governance rules as a result of growing confusion over how they will work.
The new ‘combined code on corporate governance’ was expected to be introduced for all listed companies with year-ends from 31 December 1998. But experts believe the Exchange will suspend rules relating to internal controls.
Senior accountants say they are impossible to comply with, as guidelines have not been finalised, and the code was introduced halfway through the year. Under the rules, directors are expected to state in their company accounts that they have reviewed the effectiveness of a wide range of internal controls throughout the year.
Calling for an amnesty on combined code reporting until more guidance is provided, KPMG partner Mark Stock said: ‘Guidance should be the responsibility of the regulators and not the first organisations to report. Since when did the first athlete arrive at the first hurdle and decide the height at which it should be set.’
An English ICA task force is working on guidance, but confirmed it would only apply to year-ends from 31 December 1999, leaving a year without clear guidelines.
Paul Rutteman, an Ernst & Young partner, said: ‘I would hate to see a softening of the overall provisions, but recognise the inevitability of the delay because guidance is not yet available.’
A Stock Exchange spokesman confirmed that a communication on disclosure requirements giving practical guidance was planned.
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