Breaking finance and business news, tax information, jobs and more for finance directors and senior finance professionals.

Accounting

Auditing criminal offences apply in 2008

Written by DOF Online, 2007
Thursday, 12 July 2007
New criminal offences concerning audit reports will apply only to accounting periods that start after April 2008, even though they were outlined in the 2006 Companies Act. The provisions result from a tightening of the audit process following the Enron scandal in the United States. Although included in the 2006 Companies Act no indication had been given about what periods they would apply to. However, the Department of Business, Enterprise & Regulatory Reform, in one of its first announcements, has stated that offences will have to have been committed after April 2008. Competitiveness minister, Stephen Timms, said, “This new provision will come into effect for audits of financial reports for periods beginning on or after 6 April 2008 and not for reports on any earlier periods.” “The Act introduces a new criminal offence in respect of an individual who knowingly or recklessly causes an audit report to include anything that is misleading, false or deceptive,” he explained. “I believe it is right: we all have an interest in reliable auditing.” The minister claimed the drafting means no one will be at risk of prosecution for carelessness or for negligence. Auditors and accountants had asked the government to clarify the intentions of the legislation. The chief executive of the Institute of Chartered Accountants in England & Wales, Michael Izza, said he was delighted the government had listened to his members’ pleas for the law not to be applied retrospectively to audit work performed before the implementation date. “Our goal has always been to ensure that the quality of the audit is maintained,” he said.