Queen spells out plans for audit shake-up
Legislation imposing a major post-Enron shake-up of company accounting and audit arrangements has been included in the Queen's Speech setting out the government's agenda for the coming political year.
Link: No liability cap in Queen’s speech
Among 23 bills and seven draft bills, there are proposals for:
- community interest companies;
- modernising charity law;
- tightening pensions regulation and setting up a Pension Protection Fund.
The government also made it clear that it remained committed to the overall reform of company law following the independent review and will continue with this work ‘to ensure that the UK is the best place in the world to set up and run a business’.
The Companies (Audit, Investigations and Community Enterprise) Bill is designed to implement safeguards recommended post Enron/WorldCom ‘in order to prevent similar events happening in the UK’.
Its terms include:
- tightening the regulation of auditing and increasing powers to investigate companies;
- strengthening auditors’ powers to obtain information from directors, employees and others;
- requiring directors to state they have not withheld relevant information from auditors;
- compelling companies to publish full details on non-audit services purchased from their auditors;
- allowing the Inland Revenue to pass on information about suspect accounts that it has come across during tax investigations and;
- strengthening the Financial Reporting and Review Panel’s role enforcing accounting requirements.
The same legislation will include provisions for a new form of company which has social objectives as its primary purpose instead of maximising profits, without the same constraints as charities.