PracticeConsultingChance for forward thinking

Chance for forward thinking

By the end of July comments are due with the DTI on the far reaching company law reform proposals for larger companies.

The profession should be pushing the debate. For one thing, the review touches most of what we practice. For another, we can show that we are indeed business advisers. The several hundred pages of consultation can be simplified into three themes.

Amongst sound analysis of directors’ duties, the interest is in corporate responsibility to stakeholders (such as employees and the wider community). The suggested approach for directors to take account of relationships with stakeholders in creating shareholder value is sensible in 21st Century society. In our language, aren’t those relationships the company’s assets to be safeguarded and accounted for?

Another provocative proposal is a possible formal role for non-executives in monitoring management performance, with an eye to the US, regarded as tougher on non-performance. Is this a horrible thought of a two-tier board? Or a view of the unitary board of the future? As business advisers what do we think?Preferring the preliminary statements as the ‘main accounts’, as proposed, is sensible – today. But picture a future electronic continuum of information, which people can access for what they want, and the distinction between the prelims and full accounts pales. A new Operating and Financial Review would be a structured account of stakeholder relationships as well as the many other factors relevant to corporate value which cannot be found in the historical accounts.

Auditors would put their names to the OFR – surely needed to maintain our relevance to business and society. As part of the package, there would be reasonable limitation of liability. Without proportional liability, or a close surrogate, we risk conditioning our future partners and staff more as compliers than advisers. Yet the demand for more imaginative accountability by directors will need the auditors’ board level advice.

What a rare opportunity for some forward thinking by the profession!

Roger Davis, a PricewaterhouseCoopers senior partner, represents the ICAEW on the DTI company law consultative committee.

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

5m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

11m Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

12m Kevin Reed, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

12m Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

12m Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

1y Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

1y Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

1y Stephanie Wix, Writer