City & Business: Cadbury's mouthful

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The Independent Online
PUBLIC companies are often forced to comply with some pretty daft regulations and directives, but the latest outpouring from the Cadbury Committee - you remember, that's the body which is meant to be setting standards of corporate governance so the big fraudulent collapses of the past five years don't happen again - really does take the biscuit.

This is 67 pages of mind-boggling draft (or is it daft) guidance on how to set up adequate systems for 'internal control and financial reporting'. To comply with the recommendations of the Cadbury Committee, directors will from this year have to sign off their accounts with a statement that guarantees adequate internal controls. The document tells them how to do it. This, however, is not a guidance booklet, it's a book.

If its purpose is to stop the Maxwells, Polly Pecks and Brent Walkers of this world, you can be pretty sure it's going to fail; most of it is accounting mumbo-jumbo with little if any relevance to the business of preventing or arresting financial malpractice.

For extremely large and far- flung multinational companies, it may have some relevance; most of them will already have similar checks and controls in place. But for small to medium-sized public companies the document is wholly inappropriate - a bureaucratic nightmare.

If you had sat 20 auditors down in a room and asked them to write a dream ticket for billing their clients, they could hardly have come up with a better package. Sir Adrian Cadbury, chairman of the committee knows it. He's been apologising privately for this horribly misguided piece of auditor's witchcraft to virtually every finance director he's had to confront.