Hewitt pledges new Bill to tighten up on accounts

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The Independent Online

The Government is to press ahead with legislation in the next session of parliament to prevent an Enron-style accounting scandal occurring in the UK, the Trade and Industry Secretary, Patricia Hewitt, will announce today.

Ms Hewitt will unveil plans for a new Companies and Community Interest Bill this autumn which will strengthen powers to investigate companies and tighten the regulation of auditors.

The new legislation will also give auditors increased powers to obtain information from company directors and require directors to state they have not withheld any relevant information from their auditors.

Companies will also be required to publish full details of the non-audit services they have bought from their auditors - a cross check designed to help prevent conflicts of interest.

The Inland Revenue will also be allowed to pass on information about suspect accounts they have come across during tax investigations.

The "priority" changes in legislation to be outlined by Ms Hewitt are in line with the recommendations of a Government working party set up in the aftermath of the Enron and WorldCom scandals and chaired by the then Industry minister Melanie Johnson and the Financial Secretary to the Treasury Ruth Kelly.

The Government will also use the legislative opportunity provided by the Bill to enact its proposals on community interest companies (CICs) - businesses set up with the express purpose of using their assets and profits for the public good.

The new law will allow CICs such as the Eden Project and Big Issue to protect their assets to ensure they are used for the community interest.

Ms Hewitt will also announce plans for a second and much broader Bill to introduce other changes in company law. The legislation, to be introduced when parliamentary time permits, will include housekeeping measures such as making digital signatures admissible in law.

In a speech to Business in the Community's annual conference, Ms Hewitt is expected to say: "We want the UK to have the best system of corporate governance in the world. Our approach all along has been to take forward this policy in a thorough and considered way, avoiding any temptation to make a knee-jerk response.

"Our response to the Enron and WorldCom scandals has been well thought through and it is important that we press on now with this priority legislation."