Speaking at a Business in the Community (BITC) conference in London on Wednesday, UK Trade and Industry Secretary, Patricia Hewitt announced that during the next parliamentary session, new legislation designed to boost auditor regulation will be under discussion.
However, she also revealed that a wider reform of the UK's company laws will have to be put on hold, as it is not yet ready for inclusion in the Queen's Speech.
Under the terms of the new auditor regulation laws, proposed in the wake of high profile accounting scandals such as the collapse of Enron, the Inland Revenue will reportedly be given the power to act as 'whistleblower' if it suspects that companies are employing abusive accounting practices.
Government inspectors will be permittted access to company offices, and will be allowed to request information, and suspected abuses will be dealt with by the Financial Reporting Review Panel. Firms will also be obliged to provide a breakdown of non-audit services performed by their auditors in their annual reports.
Audit firms will have been disappointed to learn that the proposed bill does not contain provisions to limit their liability in the event of litigation against them.
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