§ Mr. IrvineTo ask the Secretary of State for Trade and Industry what progress has been made towards establishing the new arrangements for the making and supporting of accounting standards.
§ Mr. RedwoodIn October I announced that Sir Ronald Dearing had agreed to become chairman-designate of the Financial Reporting Council. His task was to negotiate terms with all concerned so that the new arrangements for making and enforcing accounting standards were in place in the summer. Sir Ronald has reported to me and the Governor of the Bank of England that he has established a firm basis on which to proceed to full implementation of the new arrangements. In particular he has received satisfactory assurances of the initial funding from the Consultative Committee of Accounting Bodies (CCAB), the International Stock Exchange (ISE), and the Bank of England on behalf of the banking community. I have told Sir Ronald that my Department will also be making a contribution of about one third of the costs to be incurred. The proposed budget not only covers the costs of the envisaged activities of the Financial Reporting Council and the Accounting Standards Board but includes a substantial provision for legal expenses by the review panel in the event of contested procedings on defective accounts.
Sir Ronald has drawn up detailed proposals for the constitution of the new bodies. The chairman of the Financial Reporting Council will be supported by three deputy chairmen, and together the four will constitute an executive body responsible for finance and appointments. The deputy chairman, like the chairman, will be appointed by the Secretary of State for Trade and Industry acting jointly with the Governor of the Bank of England and will be senior representatives of the accountancy profession, the world of business and the financial community. On Sir Ronald's recommendation, and with the governor's agreement, I have asked Mr. Philip Couse (chairman CCAB), Sir Trevor Holdsworth (president CBI) and Mr. Andrew Hugh Smith (chairman ISE) to serve as deputy chairmen-designate, and I am delighted to say that they have agreed to do so. Formal appointments will be made when the Financial Reporting Council is established. In the meantime the group will give priority to indentifying the first chairman of the Accounting Standards Board.
It is a considerable achievement to have concluded the necessary consultations and developed detailed proposals in so short a time, and I congratulate Sir Ronald on the excellent progress he has made. I have asked him to proceed without delay to implement the proposals so that the new arrangements are ready to take over from the present Accounting Standards Committee on 1 August.