DTI proposals steer clear of US path
Trade and industry secretary Patricia Hewitt has admitted the proposals introduced by the Co-ordinating Group on Audit and Accounting were required to avoid US-style legislation.
Link: Read more about the DTI report
The DTI report, published last week along with the review of the accountancy regulatory regime and backed up by the previous release of the Higgs and Smith reviews, outlined measures that companies should take to improve corporate governance. All were based on a best practice and principles approach rather than the introduction of laws. ‘There was no need to rush into a Hewitt/Brown equivalent of the Sarbanes/Oxley Act but we needed a considered, all-embracing approach to Enron,’ said Hewitt.
In an exclusive article for Accountancy Age, the trade secretary defended the government’s decision not to impose mandatory auditor rotation on companies, instead recommending the rotation of lead partners every five years and continuing to allow audit firms to provide non-audit services to their clients. ‘Objectives of mandatory rotation can be better achieved by an enhanced role for the audit committee in the appointment of the auditor,’ she said. ‘Tougher standards, greater audit firm transparency and more independent oversight are preferable to a blanket ban on the provision of non-audit services.’
Click here to read Patrica Hewitt’s comments in full.