PracticeAuditGovernment to probe auditing weaknesses

Government to probe auditing weaknesses

The government is to launch an investigation into weaknesses in the auditing of company accounts, following the collapse of energy giant Enron and allegations of an accounting cover-up involving its former auditor Andersen.

Trade secretary Patricia Hewitt is scheduled to announce the investigation when she delivers a speech to business leaders at Mansion House on Wednesday, according to reports.

It will be undertaken by the Department of Trade and Industry, the Treasury, the Financial Services Authority and independent accountancy regulator the Accountancy Foundation.

Among the areas to be examined will be auditor independence and compulsory rotation of auditors – as suggested in Accountancy Age’s Manifesto.

Hewitt is also expected to launch another inquiry into the role of non-executive directors.

A fortnight ago she told the House of Commons the government believed effective non-executive directors had a key role to play in contributing to the success of their companies.

She added: ‘This is an area where the government believes there is room for improvement.’

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