Developments post-Enron
Confidence in global financial markets was seriously shaken by the high profile corporate failures in the US such as Enron and WorldCom. As the scale of accounting irregularities and the role of auditors became clear the creditability and reputation of both company directors and the accountancy profession - auditors in particular were called into question.
In 2002, the Co-ordinating Group on Audit and Accounting (CGAA) was set up to examine the issues arising from the collapse of Enron and ensure that the effectiveness of the UK systems of financial reporting and audit regulation were reviewed thoroughly by the appropriate regulators.
The group presented its final report in January 2003 - the then government accepted the findings. The report concluded that our approach was fundamentally sound but that the system could be strengthened in the following areas:
- Auditor Independence
- Corporate Governance
- Audit Firm Transparency
- Financial Reporting: Standards and Enforcement
- Monitoring of Audit Firms
The group recommended a number of legislative and non-legislative measures to strengthen the system in these areas.
