Tougher director accountability on the way, UK watchdog tells companies

Carillion

16/06/2022 16:34

By Huw Jones
    LONDON, June 16 (Reuters) - Britain's accounting and company
governance watchdog said on Thursday it will introduce its own
version of a U.S. rule to make directors accept more "overt"
responsibility for internal controls.
    Britain's industry ministry said last month it would not put
in law a version of the mandatory U.S. Sarbanes-Oxley rule,
which forces U.S. company directors to personally attest to the
adequacy of internal controls and face prison for breaches.
    Companies in Britain had pushed back against such a move
aimed at ensuring accuracy of information published in financial
reports.
    The ministry wants to reform auditing and corporate
governance after collapses at builder Carillion, retailer BHS
and elsewhere, though some changes require legislation.
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    Jan du Plessis, chair of the Financial Reporting Council,
said the watchdog would set out shortly how some of the planned
reforms could be implemented without legislation.
    The omission of a "UK-lite" version of Sarbanes-Oxley was a
missed opportunity given there is a need to look at companies
and not just auditors when it comes to improving financial
reporting, du Plessis told a City & Financial event in his first
speech as FRC chair.
    "Just to put all the onus on the audit profession and to
hold the audit companies accountable for when things go wrong
really misses the point," du Plessis said.
    "With the government's support, we will be consulting
towards the end of this year and the early part of next year
about the merit of using the corporate governance code and the
audit reforms we are working on to put more pressure on
directors to take responsibility for their own internal
controls," du Plessis said.
    "It won't be Sarbanes-Oxley but it is the same idea."
    Under the governance companies must say if they comply with
its provisions or explain why they are not.
     

 (Reporting by Huw Jones; editing by David Evans)
 ((huw.jones@thomsonreuters.com; +44 207 542 3326; Reuters
Messaging: huw.jones.thomsonreuters.com@reuters.net))