This paper examines post‐Enron developments in UK audit and corporate governance regulation. It considers the latest government‐initiated reviews into audit regulation…
Abstract
This paper examines post‐Enron developments in UK audit and corporate governance regulation. It considers the latest government‐initiated reviews into audit regulation, specifically those conducted by the Co‐ordinating Group on Audit and Accounting Issues and the DTI Review Team, and into corporate governance, specifically those undertaken by Derek Higgs and Sir Robert Smith. The paper notes that the reviews were undertaken in the context of developments initiated both before and after the collapse of Enron, including, respectively, the new system for the regulation of the UK accountancy profession as established by the Accountancy Foundation, and the US Sarbanes‐Oxley Act. The reviews have been welcomed by government and thus should play a large part in setting the agenda for the future regulation of UK audit and corporate governance. The proposals for auditing share a number of characteristics with the recommendations of a pre‐Enron empirical study which investigated the regulation of UK listed company audit, although significant distinctions remain. The proposals for corporate governance continue the ‘comply or explain’ approach and do not recommend passing its regulation from the Financial Reporting Council to another independent body of ‘stature’ such as the Financial Services Authority (FSA). It is concluded that key to successful implementation of recent proposals will be the need, for audit, to demonstrate that there is no cosy relationship between regulators and the auditing profession, especially the ‘Big Four’ firms, and, for corporate governance, a willingness to look outside the ‘one‐size‐fits‐all’ approach.
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Ian P. Dewing and Peter Russell
This paper examines latest thinking and new developments in the regulatory framework for statutory audit at European Union (EU) level. It follows an earlier paper, published in…
Abstract
This paper examines latest thinking and new developments in the regulatory framework for statutory audit at European Union (EU) level. It follows an earlier paper, published in this journal. Since 1999 when the paper was drafted, even more developments have occurred both at an EU level and in the USA, which are likely to have a significant impact on statutory audit in the EU in years to come. Latest developments are reviewed in three areas: profession related issues; company law issues; and, accounting and auditing standards. The paper concludes that significant advances have been made towards completion of the regulatory framework of statutory audit in the EU. What remains of concern is a lack of progress towards adoption of international auditing standards. Unless financial statements are both prepared and audited in the same way, it is difficult to see how financial information in the EU can ever be truly harmonised.
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Ian P. Dewing and Peter O. Russell
For more than two decades the framework governing the statutory audit of companies within the European Union (EU) has been the subject of debate and reform. Significant progress…
Abstract
For more than two decades the framework governing the statutory audit of companies within the European Union (EU) has been the subject of debate and reform. Significant progress has been made with the publication of the European Commission (EC) Green Paper (1996), and the subsequent EC Conference (1997) and EC Communication (1998). The objective of this paper is to provide a commentary on the recent reviews of the regulatory framework for statutory audit at EU level in the context of ongoing developments. The paper concludes that the regulatory framework for statutory audit in the EU is far from complete and much remains to be done. The way forward, at least in the short term, relies on the accountancy and auditing profession taking the lead in finding solutions. The different nature of accounting, financial and legal traditions within the EU, and the need to search for consensus, however, makes it difficult to predict when the EC will be in a position to complete an internal market for audit services within the EU. A significant factor worthy of further consideration is that developments at the international level are in danger of outpacing the EU's ability to respond. Because of the size, power and adaptability of US financial markets, it is possible that US Generally Accepted Accounting Practices (US GAAP) and US Generally Accepted Auditing Practices (US GAAS) may become the dc facto global standards for listed companies.
Ian P. Dewing and Peter O. Russell
This paper reports the results of a postal questionnaire survey of UK primary stakeholders, members of the Institutional Fund Managers Association, as to the definition of the…
Abstract
This paper reports the results of a postal questionnaire survey of UK primary stakeholders, members of the Institutional Fund Managers Association, as to the definition of the expectations gap, its constituents, and the extent to which the expectations gap might be narrowed by audit regulation. The study revealed that fund managers were aware of the audit expectations gap and were particularly concerned about the scope and responsibilities of the auditor, and monitoring of auditors’ work. Fund managers agreed that increased regulation offered potential to narrow the expectations gap, especially as regards monitoring and discipline of auditors. The paper concludes that establishment of the Accountancy Foundation should provide greater independence to the investigation and disciplinary processes of the existing regulatory framework, and thus go some way to narrowing the expectations gap. Concerns may remain about its perceived independence of the profession and the lack of a specific obligation to investigate auditors’ work in circumstances of corporate failure.
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Ian P. Dewing and Peter O. Russell
Under the Financial Services and Markets Act 2000, the Financial Services Authority (FSA) is the single regulator of firms in the UK financial services industry. The Act grants…
Abstract
Purpose
Under the Financial Services and Markets Act 2000, the Financial Services Authority (FSA) is the single regulator of firms in the UK financial services industry. The Act grants extensive powers to the FSA such that it can impose by rules and regulations additional corporate governance requirements on firms in the financial services industry. The legislative and regulatory requirements also extend to individuals under the FSA approved persons' regime. The purpose of the paper is to examine this individualization of corporate governance.
Design/methodology/approach
The paper first explores the rise to significance of internal control and risk management in corporate governance and regulation, and links this to Beck's risk society and individualization theses. The extent of the individualization of corporate governance by the approved persons' regime is explored by examining three sources of evidence: the FSA's documents setting out the approved persons' regime; the initial perceptions about the implementation of the approved persons' regime from interviews with high‐level individuals in the financial services industry; and the outcomes of illustrative FSA enforcement actions against individuals.
Findings
The findings are that the FSA has developed a comprehensive and formidable apparatus for the individualization of corporate governance in the UK's financial services industry. It is argued that a discourse based on the interpretive evaluations of internal control and risk management may be replacing a discourse based on the quantitative techniques of management accounting, which may be characterised as the demise of the “calculating self” and the rise of the “auditable self”.
Practical implications
The FSA's approved persons' regime could be developed as a model for other areas of the private and public sectors, where for regulatory purposes it may be desirable to identify approved or official roles.
Originality/value
The ability of regulators to “make” corporate governance by rules and regulations is relatively unexplored. Also, the focus of corporate governance is on firms rather than individuals. The paper considers the extension of corporate governance from the firm to the individual that may be achieved by regulation.
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Ian P. Dewing and Bernard C. Williams
Audit committees have a relatively long history dating back to thenineteenth century. It is only in recent years that their use has beenpopularized again in the private sector…
Abstract
Audit committees have a relatively long history dating back to the nineteenth century. It is only in recent years that their use has been popularized again in the private sector. Fundamentally, it is often argued that audit committees exist to mediate between executive directors and auditors while providing an overall enhancement of corporate accountability. One of the recent effects of the drive to incorporate business methods into other sectors has been the establishment of audit committees. It does, however, pose the question of the role of these committees which are operating in a different context from their origins. Looks at the operation of audit committees in a defined sector, namely universities. Using a postal questionnaire, all directors of finance (or equivalent) in UK universities were surveyed to establish whether or not audit committees existed in their institutions, the purpose being to determine the extent of audit committees, the reasons why they have or have not been established, and the advantages and problems encountered with them. One interesting result that arose with implications for accountability and governance was that in universities the stewardship and strategic policy‐making functions are generally separate and that audit committees report only on the former. This is in contrast to the situation in the private sector where both functions are generally combined in the activities of the board of directors. Because there is considerable overlap between the membership of audit committees and the boards of directors, it could be argued that this provides the potential for a greater degree of accountability and governance than currently exists in universities.
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Ian P. Dewing and Peter O Russell
There has been widespread recent public debate about problems of corporate governance, accountability and audit regulation in the UK. In the arena of UK audit regulation, the…
Abstract
There has been widespread recent public debate about problems of corporate governance, accountability and audit regulation in the UK. In the arena of UK audit regulation, the Auditing Practices Board’s publications, The Audit Agenda and The Audit Research Agenda, contain a discussion of audit regulation and call for research into the problem. This article reviews the “macro”, “micro” and “international” models for the regulation of audit that have already been proposed in the literature, and considers the appropriateness of the models to improve the regulation of company audit in the UK. The main conclusion is that while each of the models proposed have superficial attractions, there is a danger of considering them out of context. More research is needed into the practicalities, costs and benefits of the various models that have been suggested. Without such research there is a risk that any reform may not improve, or indeed may reduce, the effectiveness of the existing regulatory framework.
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Beatriz López, Niko Kargas, Julie Udell, Tomáš Rubín, Linda Burgess, Dominic Dew, Ian McDonald, Ann O’Brien and Karen Templeton-Mepstead
The purpose of this study was to explore the views of autistic people, carers and practitioners regarding the barriers autistic employees face at work (Study 1) and to use these…
Abstract
Purpose
The purpose of this study was to explore the views of autistic people, carers and practitioners regarding the barriers autistic employees face at work (Study 1) and to use these views to inform the design of an employment programme for autistic employees without learning disabilities (Study 2).
Design/methodology/approach
In Study 1, 16 (20%) carers, 17 (21%) practitioners and 47 (59%) autistic adults who had been or were currently employed, answered a survey regarding barriers at work. Study 2 evaluates the efficacy of a set of profiling assessment tools (PA) developed to help employers make individually-tailored adjustments for their autistic employees by delivering an employment programme consisting of 15, 8-week work placements.
Findings
In Study 1, only 25% of autistic adults reported having had adjustments in the workplace and all groups reported this as the main barrier – alongside employers’ lack of understanding. Two sets of results demonstrate the efficacy of the PA tools in addressing this barrier. First, a comparative cost simulation revealed a cost-saving in terms of on-job support of £6.67 per participant per hour worked relative to published data from another programme. Second, 83% of autistic employees reported having had the right adjustments at work.
Research limitations/implications
This is an exploratory study that did not include a comparison group. Hence, it was not possible to evaluate the efficacy of the PA tools relative to a standard employment programme intervention, nor to assess cost reduction, which currently is only estimated from already available published data.
Practical implications
Overall the findings from these studies demonstrate that the time invested in the high-quality assessment of the profile of autistic employees results in saving costs over time and better outcomes.
Originality/value
The originality of the Autism Centre for Employment programme resides in that, unlike other programmes, it shifts the focus from helping autistic employees to helping their employers.
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David Collins, Ian Dewing and Peter Russell
The purpose of this paper is to investigate the jurisdictional expansion of audit into the area of UK financial regulation. The paper draws on the analytical framework of new…
Abstract
Purpose
The purpose of this paper is to investigate the jurisdictional expansion of audit into the area of UK financial regulation. The paper draws on the analytical framework of new audit spaces (Andon et al., 2014, 2015), which built on the concept of regulatory space (Hancher and Moran, 1989), and characterises this new audit space as regulatory work.
Design/methodology/approach
Through an intensive reading of a variety of publicly available documentary sources, the paper investigates the role of auditors and accountants in the reporting accountants’ and skilled persons’ regimes in the UK under the Banking Act 1987 and the Financial Services and Markets Act 2000.
Findings
The paper identifies a new audit space characterised as regulatory work, which is made up of three distinct phases (and suggests the recent emergence of a fourth phase), and considers the extent to which these phases of regulatory work share common themes across new audit spaces identified by Andon et al. (2015) as independence, reporting, accreditation and mediating.
Originality/value
The paper identifies a further jurisdictional expansion of audit into a new audit space, characterised as regulatory work.
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Man has been seeking an ideal existence for a very long time. In this existence, justice, love, and peace are no longer words, but actual experiences. How ever, with the American…
Abstract
Man has been seeking an ideal existence for a very long time. In this existence, justice, love, and peace are no longer words, but actual experiences. How ever, with the American preemptive invasion and occupation of Afghanistan and Iraq and the subsequent prisoner abuse, such an existence seems to be farther and farther away from reality. The purpose of this work is to stop this dangerous trend by promoting justice, love, and peace through a change of the paradigm that is inconsistent with justice, love, and peace. The strong paradigm that created the strong nation like the U.S. and the strong man like George W. Bush have been the culprit, rather than the contributor, of the above three universal ideals. Thus, rather than justice, love, and peace, the strong paradigm resulted in in justice, hatred, and violence. In order to remove these three and related evils, what the world needs in the beginning of the third millenium is the weak paradigm. Through the acceptance of the latter paradigm, the golden mean or middle paradigm can be formulated, which is a synergy of the weak and the strong paradigm. In order to understand properly the meaning of these paradigms, however, some digression appears necessary.