Bean-counting blueprint launched

THE Government has launched its blueprint for accountancy reform to try to rebuild confidence badly shaken by massive financial scandals including WorldCom and Enron.

A task force set up by Trade Secretary Patricia Hewitt and Competition Minister Melanie Johnson is calling for a competition investigation into the Big Four accountancy firms. Hewitt told the House of Commons: 'The status quo is not an option.'

Independent non-executive directors will be required to appoint auditors, to stop companies getting too 'cosy' with them. Audit partners, and other senior members of the audit team, will have to change every five years to bring a fresh pair of eyes to the books. Firms may have to change their audit firms by law after a certain period.

Accountants, who have in the past offered audits at rock-bottom prices to get lucrative consultancy work, will have to declare non-audit jobs. Auditors will not be allowed to do some types of non-audit work. Regulation of the profession is also under scrutiny, particularly the way accountancy watchdogs are funded. There are fears that because the money comes from industry, their independence may be threatened.

The recommendations will feed in to the Government's review of company law, which could impose 'stiff criminal penalties' on directors who do not provide information to auditors. It will tie in with a review of the role of nonexecutive directors.