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New accounting standards for UK

LONDON – The British government introduced new accounting rules in a bid to shore up investor confidence in the wake of the spectacular Enron and WorldCom collapses in the United States.
Trade and Industry Secretary Patricia Hewitt said the reforms were “substantial” and “tough” to protect millions of pensioners, savers and businesses.

“We owe it to savers, investors and employees as well as honest business people to ensure that our defenses are as robust as they sensibly can be,” Hewitt told the House of Commons, where she announced the new rules.

Opposition Conservative party lawmaker Tim Yeo said he “broadly welcomed” the government's approach.

The department said the reform package included measures to create a single authoritative regulator with responsibility for setting accounting and auditing standards, and establish a new independent audit inspection unit to monitor the audits of listed companies, major charities and pension funds.

The measures would also transfer responsibility for setting ethical standards from professional accountancy bodies to an independent body -the Auditing Practices Board; set up an Investigation and Discipline Board with the power to remove the eligibility to audit from firms and individuals; improve auditor independence by rotating the lead audit partner every five years, instead of the current seven.

The new rules would also prevent partners and senior employees of auditing firms taking up employment with a company they audit within two years of leaving their firm; enhance the role of audit committees, and ensure larger companies disclose more information about non-audit services they buy from their auditor.

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