News in Brief - 21 January
JDS backs up Big Five
Joint Disciplinary Scheme executive counsel Chris Dickson has admitted that security regulations in the Big Five – designed to prevent accountants buying shares in which their firms have an audit interest – could never be tight enough. His statement followed revelations that PricewaterhouseCoopers paid #1.5m to the US Securities & Exchange Commission after nine partners bought shares in 76 PwC-audited companies between 1996 and 1998. Dickson said: ‘All the major accountancy firms have very strict rules about employees owning shares in companies which they audit, and even students have to declare that they do not have an interest in any of them; but someone could always buy using another name.’
APB outsourcing advice New guidance from the Auditing Practices Board advises auditors reviewing clients’ outsourced operations that they may need to gain access to outsource suppliers’ records. SAS 480 ‘Service Organisations’ will apply to financial years ending after 23 December 1998 and requires the auditor to assess how outsource contracts are monitored.
PAYE rules review urged Chancellor Gordon Brown is being urged by Labour MPs to change PAYE tax rules to allow employers to subsidise employees’ travel costs – by bus or train. The proposal – a Commons motion signed by more than 16 backbenchers – welcomes plans to tax non-residential car parking spaces but ‘regrets that any public transport subsidy … is seen as a taxable benefit in kind’.
Go-ahead for trust merger The government has approved the merger by absorption of Lifecare NHS Trust into Surrey Oaklands NHS Trust. Lifecare finance director David Healey resigned, along with chief executive Ian Semple, earlier this month amid allegations of financial irregularities at the trust, currently being investigated by police. Surrey Oaklands FD Gill Galliano, who is also acting FD at Lifecare, is expected to take on the dual role once the merger is completed.
Foreign deals top merger league UK companies are the biggest buyers of foreign businesses, displacing the position traditionally occupied by the US, according to a survey by KPMG Corporate Finance compiled from worldwide data from over 5,000 cross-border mergers, acquisitions and strategic investments announced last year. Last year, the UK struck international deals worth almost #78bn compared to #20bn in 1997. This was led by BP’s #37bn merger with Amoco.
Pensioners get bad advice The government has been accused of offering ‘completely inappropriate advice’ to poorer pensioners to switch investments to ISAs to escape the loss of tax credits. The charge came from Tory accountant MP and shadow Chief Secretary David Heathcoat-Amory, who said the new savings vehicle was ‘untried, untested and does not yet exist’. He warned that charges would cancel out any advantage and urged the Financial Services Authority ‘to take a close interest’ in such advice from Treasury ministers.
New institute guidelines The English ICA has followed the launch of Lloyd’s Regulatory Plan for 1999 with new guidelines to members preparing and auditing the financial statements of the institute’s corporate members.