Ministers and regulators have successfully resisted importing a rules-based culture into the audit arrangements for UK companies. They persist in the US, despite most commentators acknowledging they were a contributory factor in the Enron and Worldcom calamities.
However, there is a danger that a box-ticking approach will operate in UK boardrooms if the Higgs proposals are allowed to stand unchecked. Even Derek Higgs has warned shareholders not to push companies into ‘mindless compliance’ with the proposals in his report on corporate governance.
The praises of principles over rules have long been sung by leading UK accountants. And those arguments have impressed the government, which resisted wholesale change in its proposals for audit reform published back in January.
As ICAEW president Peter Wyman acknowledged this week, the battle is only half-won.
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