Standards

Briefs ....

Department for Business, Enterprise & Regulatory Reform | Audit firm inspections | Farepak | Corporate manslaughter bill | Misstatement rules

The Department of Trade and Industry has been abolished and many of its functions taken up by the new Department for Business, Enterprise & Regulatory Reform (DBERR). The new Department will be responsible for “creating the conditions for business success, developing deeper and more effective engagement with business, and [will have] the ability to promote the competitiveness agenda across critical areas of government policy”.

The Professional Oversight Board (POB) – part of the Financial Reporting Council – has announced changes to reporting arrangements that will see published reports on inspections of major audit firms.

Sir John Bourne, POB chairman, said: “The planned changes demonstrate the Board’s commitment to the principles of transparency and accountability and its responsiveness to the changing expectations of stakeholders”.

The Accounting Investigation & Discipline Board (AIDB) is to open an investigation into the conduct of accountants involved in last year’s collapse of European Home Retail and its Farepak subsidiary. Farepak was a Christmas hamper company, and its collapse led to questions in the House of Commons and calls for an investigation of the company’s directors and bank.

The AIDB said its inquiry would examine the preparation of Farepak’s accounts for the period ended 20 April 2005 and the conduct of accountants in the circumstances leading up to Home Retail and Farepak being placed in administration in 2006.

The House of Lords has defeated government plans for a corporate manslaughter bill, voting to support a change that would have the legislation extended to cover deaths in custody. The amendment, proposed by Lord Ramsbotham, former chief inspector of prisons, was supported by a vote of 183 to 145.

Companies should be liable for fraudulent misstatements made in ad hoc as well as periodic disclosures, according to recommendations by the Davies Review of Issuer Liability. The Review concluded that issuers and investors alike see no principled distinction in terms of liability between ad hoc and periodic disclosures, and that it is confusing to have different liability regimes according to whether a disclosure is required under the transparency or market abuse directives. 

July 2007