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Wednesday, 24 July, 2002, 17:32 GMT 18:32 UK
Hewitt tackles UK accountancy rules
UK Trade and Industry Secretary Patricia Hewitt
Patricia Hewitt: Scrutinising the audit industry
UK trade minister Patricia Hewitt has released a report setting out ways of restoring confidence in corporate accounts in the wake of the Enron and WorldCom scandals.

The report, drawn up by a government-appointed panel, stopped short of calling for the compulsory rotation of auditors by listed UK firms, saying those proposals were still being studied.

The report puts forward a number of ways of tightening up the regulation of the accounting profession.

The government is expected to use the report's findings to draw up concrete reform proposals due out later this year.

The report comes amid growing unease over the role of auditors in recent high-profile corporate collapses in the US, including the bankruptcy of former energy trading giant Enron.

Pressure for reform

Audit firms' failure to flag up accounting irregularities in several companies' books has undermined investor confidence in corporate financial statements, contributing to the recent global stock market slump.

On Tuesday, the UK House of Commons Treasury select committee called for the Competition Commission to launch an inquiry into the 'Big Four' accounting firm's dominance of the market for audit services.

They also said firms should be obliged to rotate their auditors every five years, and called for restrictions on the range of non-audit services that accounting firms are allowed to provide.

It has been suggested that auditors who also earn lucrative consultancy fees from their audit clients may come under pressure to cut corners in signing off those clients' books.

See also:

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