§ Dr. CableTo ask the Secretary of State for Trade and Industry what action her Department is taking to ensure that examples of false accounting in the USA are not repeated in the UK; and if she will make a statement. [66775]
§ Miss Melanie JohnsonThe UK has well-developed and internationally respected arrangements for setting and enforcing accounting and auditing standards, both of which are vital to the preparation of company accounts 473W which show a 'true and fair' view. There were substantial changes for the better to both accounting and auditing standards during the 1990s.
It would be unwise, however, to conclude that serious concerns over particular company accounts could not arise in the UK, or that more regulation can prevent all possibilities of false accounting.
There are a number of relevant actions in hand, which build on the existing position. A group, which I chair together with my hon. Friend, the Financial Secretary, was formed in February to co-ordinate the response of key regulators to the issues for accounting, auditing and aspects of corporate governance raised initially in the aftermath of Enron. The group will produce an interim report by the end of July.
In addition, the Government will publish shortly their response to the company law review, which made a number of relevant recommendations to improve company reporting. The Government have also set up a review of the role and effectiveness of non-executive directors under Derek Higgs, which is expected to report around the end of the year.
It is also important, as we move with our EU partners to adopt international accounting standards for 2005, that none of the strength of existing UK requirements is lost. The Government therefore welcome the leading role which the UK Accounting Standards Board is playing in the development of international standards; and the determination of the International Board under Sir David Tweedie to ensure that there are rigorous international standards in place by 2005.