Britain Beefs Up Accountancy Rules In Wake Of Corporate Scandals

By Agence France-Presse Britain announced on Jan. 29 the creation of a new accounting and auditing regulator as part of efforts to avert corporate scandals such as Enron Corp. and WorldCom Inc. Trade and Industry Secretary Patricia Hewitt told parliament that the new regulatory body would set and enforce accounting and auditing standards, and oversee the regulatory functions of the existing accountancy bodies. "We owe it to savers, investors and employees as well as honest business people to ensure that our defenses are as robust as they sensibly can be," she said. Hewitt said that at least half the board of a company -- as well as the chairman -- should be independent, as should all members of the audit and remuneration committees and a majority of the nomination committee. The definition of an independent director should be strengthened and clarified. Separation of roles of chairman and chief executive should be reinforced, and new descriptions should be given of the respective roles of the board, the chairman and non-executives, she added. Business leaders welcomed the measures, which the Confederation of British Industry (CBI) described as "effective and proportionate" action to strengthen faith in the integrity of British boardrooms, company accounts and auditing. "The government is to be applauded for not overreacting to financial scandals in America with hasty or heavy-handed legislation," said John Cridland, deputy director-general of the CBI, the country's top business grouping. Copyright Agence France-Presse, 2003