Speaking in the House of Commons today Hewitt said the Financial Reporting Council would take over the functions of the Accountancy Foundation, the accountancy watchdog that barely got beyond the fledgling stage.
The FSA will also aid the Financial Reporting Review Panel to become more proactive in its regulation of company reporting.
Hewitt said the reforms were ‘tough’ but ‘measured and proportionate’ and would help ensure that corporate governance in the UK remains among the best in the world.
The package of reforms announced by Hewitt includes measures to:
- create a single authoritative regulator with responsibility for setting accounting and auditing standards, pro-actively enforcing and monitoring them as well as overseeing the regulatory functions of the professional accountancy bodies;
- transfer responsibility for setting ethical standards on independence, objectivity and integrity from professional accountancy bodies to an independent body – the Auditing Practices Board;
- establish a new independent audit inspection unit to monitor the audits of listed companies, major charities and pension fundsÿ – work currently done by the professions;
- set up the long-delayed Investigation and Discipline Board with the power to remove eligibility to audit from firms and individuals;
- improve auditor independence by rotating the lead audit partner every five years and introduce greater transparency about major audit firms’ businesses;prevent partners and senior employees of auditing firms taking up employment with a company they audit within two years of leaving;
- and enhance the role of audit committees and ensure larger companies disclose more information about non-audit services they buy from their auditor.
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