Well, with that colourful sideshow out of the way, this week saw the DTI get back to what it does best. Namely delay and ducking potentially controversial reform.
That, at least, would be the cynic’s interpretation the announcement on Monday that the government’s report on audit and accounting regulation will now not be published until 2003.
But with the post-Enron, post-WorldCom pressure now easing, it’s hard not to interpret this news cynically. We’re now told to expect to see recommendations in January. But that will be a full six months since Patricia Hewitt insisted there would be an ‘immediate review of the way in which the accountancy industry as a whole is regulated’.
And January 2003 is only the start. Recommendations would then be subject to consultation, and, depending on the scale of the reform embarked upon, it could be many months before change is effected. 2004 may not be out of the question. Enron and Andersen, remember, began unravelling in late 2001.
As Hewitt said this week: ‘High standards of audit and accounting are essential for our economy, for companies and capital markets, and the millions of people who invest in them.’ Implementing those standards in a considered way does take time, especially when you bear in mind how slowly the wheels of bureaucracy tend to turn in Whitehall.
But the fallout from Enron, WorldCom and all the other recent governance scandals have created a problem for the UK. It might be one of perception but that hardly matters. Delay won’t help.
It would be simple, though a little facile, to draw a parallel here with the response in the US. While in the UK we are still talking about when we will start talking about change. Across the Atlantic Sarbanes-Oxley is already law. And biting.
Of course the US had to respond swiftly. And of course the problem of aggressive earnings management and its associated nasties are largely a creation of the US market.
However, if there is any sense that the UK accountancy industry has ‘got away with it’ by sidelining reform, there is little chance that it will be able to restore its battered reputation.