Ms Hewitt said: "The collapse of Enron and WorldCom - and the accountancy malpractice they revealed - appalled investors all over the world. We owe it to savers, investors and employees as well as honest business people to ensure that our defences are as robust as they sensibly can be."
The wide-ranging reform package follows the recommendations of the two reviews set up by Patricia Hewitt and Chancellor Gordon Brown last year.
The final report of the Co-ordinating Group on Audit and Accounting Issues, together with the findings of a DTI review into the regulatory regime governing the work of the accountancy profession, are both published today by the DTI.
The package includes measures to: -
create a single authoritative regulator with responsibility for setting accounting and auditing standards, pro-actively enforcing and monitoring them as well as overseeing the regulatory functions of the professional accountancy bodies;
transfer responsibility for setting ethical standards on independence, objectivity and integrity from professional accountancy bodies to an independent body - the Auditing Practices Board;
establish a new independent audit inspection unit to monitor the audits of listed companies, major charities and pension funds - work currently done by the professions;
set up the long-delayed Investigation and Discipline Board with the power to remove eligibility to audit from firms and individuals;
improve auditor independence by rotating the lead audit partner every five years and introduce greater transparency about major audit firms' businesses;
prevent partners and senior employees of auditing firms taking up employment with a company they audit within two years of leaving; and
enhance the role of audit committees and ensure larger companies disclose more information about non-audit services they buy from their auditor.
Ms Hewitt said of the proposals:
"Our approach has been measured and proportionate but we've been tough where we needed. Today's announcement puts our corporate governance structures amongst the best in the world for the good of the millions of pensioners, savers and business that depend on them."
The report of the Co-ordinating Group on Audit and Accounting and the DTI's review of audit regulation is at:
www.dti.gov.uk/cld/post_enron.htm
The Government's new proposals to strengthen corporate governance in the UK also reflect the work of Derek Higgs and Sir Robert Smith into best practice in company boardrooms. The Higgs review is at:
www.dti.gov.uk/cld/non_exec_review
