§ The Minister for Industry and the Regions (Jacqui Smith)The House will know that we are undertaking a comprehensive reform of company law, following the independent Company Law Review and the Modernising Company Law White Paper. This involves recasting an extremely large body of legislation. Our aim is to introduce this as soon as is practicable, consistent with ensuring it is clear, coherent, delivers for business and can stand the test of time.
There are, however, some especially urgent issues on which we aim to bring forward legislation as soon as parliamentary time allows in order to implement changes to the law recommended by the various reviews in the aftermath of the Enron and Worldcom failures and covered in our Statement to the House on 29 January this year. These changes will complement the non-legislative measures already taken or underway as a result of the work of the Co-ordinating Group on Audit and Accounting Issues, and the Review of the Regulatory Regime of the Accountancy Profession, and will help restore investor confidence in companies and financial markets. The legislation will also include measures enhancing powers to investigate companies, and create a new corporate vehicle, the Community Interest Company (CIC), to boost the development of social enterprise. Creation of the CIC will take forward 62WS the proposals set out in the joint DTI, Home Office and Treasury consultation paper "Enterprise for Communities", which The Secretary of State announced in a written statement on 26 March 2003.
In parallel with this legislation, we plan to use existing powers to implement the proposal for a statutory Operating and Financial Review (OFR). We propose to publish draft regulations on the OFR for consultation in due course.
As part of the measures implementing post Enron/ Worldcom recommendations referred to above, we announced on 29 January a number of changes to the regulatory regime of the accountancy and audit professions, including the establishment of a new independent inspection unit, located within the Financial Reporting Council, to take over from the recognised supervisory bodies responsibility for monitoring audits of listed companies and other significant entities, and the establishment of a new Professional Oversight Body for Accountancy to oversee the activities of the supervisory bodies themselves.
Until the new FRC structure is formally established, it remains the responsibility of the Secretary of State to oversee the supervisory bodies' activities, and to that end we have today placed in the Libraries of both Houses copies of the annual reports for 2002 which we have received from the five existing recognised supervisory bodies for company auditors. Specifically these are: a combined report from the Institutes of Chartered Accountants in England and Wales, Scotland and Ireland; and one each from the Association of Certified Chartered Accountants and the Association of Authorised Public Accountants. These reports inform the Government about the activities of the recognised supervisory bodies in relation to their statutory requirements to monitor and enforce compliance with their rules relating to membership and eligibility to be an auditor.