PracticeAccounting FirmsThe corridors of power …

The corridors of power ...

There is not a shadow of doubt that Patricia Hewitt, the secretary of state for trade and industry, would like to make accountants more accountable in the wake of the Enron and Andersen scandals.

She has privately expressed this view even though UK accounting rules are already far ahead of those governing US accountants. But the Enron/ Andersen affair has trained the parliamentary spotlight on accountants.

Peter Wyman, the new president of the ICAEW, is at the forefront of a campaign – unwelcome to some – to tighten the rules governing accountancy.

And, as far as Hewitt is concerned, in this Wyman is pushing at an open door.

It was in February that Hewitt announced the government was to review auditing after the collapse of Enron.

What concerns her more is the need for whistleblowers to raise the alarm when things look like going wrong. This is a result of the failure of Andersen to sound the klaxon over the huge financial irregularities at Enron.

And what is troubling her as much as anything is the way that a conflict of interest is created where, it seems, increasingly, auditors hold accountancy or consultancy contracts at the very firms which they audit.

This is something which Hewitt is determined to address, either through primary legislation or through regulation.

However, the malpractices in the US which the Enron affair has thrown up have sent a number of MPs into an overdrive of reforming zeal, even though they are generally malpractices unlikely to occur on this side of the Atlantic.

But, as politicians know, it usually takes a financial disaster – or an equivalent calamity in any other sphere of life – before parliament lumbers into action.

It is a habit known at Westminster as shutting the gate to make sure that the second horse doesn’t bolt.

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