12 February 2002
In the wake of Enron and the current climate of increasing commercial and economic pressures on those responsible for preparing financial statements, CIMA has today warned companies not to lose sight of the primary responsibility of company directors, not auditors, to guard against the risk of 'aggressive earnings management'.
CIMA Chief Executive, Charles Tilley, a former KPMG partner and finance director of the Hambro banking group, said:
'Now more than ever before, company directors must respect the spirit rather than just the letter of the principles of good corporate governance. This is particularly so in the areas of audit and remuneration where, above all else, the guiding light has to be 'transparency'.'
He added that: 'The overwhelming majority of CIMA members work in business and none are involved in statutory audit. However, in maintaining the quality and reliability of financial reporting, it is first and foremost the responsibility of company directors, along with their finance teams, to avoid the risk of standards of reporting company performance being undermined by commercial and similar pressures.'
'It is absolutely key to the functioning of a market economy that a company’s financial statements represent a true and fair view of its affairs. In the long term it is also key to the health and, even, survival of a company itself.'
'The UK benefits from a principle rather than a rule based set of financial reporting standards and the UK accountancy profession will now be overseen by an independent regulator. But we must remain diligent and not become complacent or a crisis will surely follow.'
'CIMA is committed to working with the ASB, APB, DTI, FSA, Treasury, along with the other professional bodies to ensure we continue to develop, enhance, promote and enforce the quality standards of financial reporting and corporate governance that are essential for a vibrant market economy. CIMA is also committed to similar objectives in the international arena through the IASB, IFAC and FEE.'
Acronyms
ASB: Accounting Standards Board; APB: Auditing Practices Board; DTI: Department of Trade and Industry; FSA: Financial Services Authority; IASB: International Accounting Standards Board; IFAC: International Federation of Accountants; FEE: Federation des Experts Comptables Europeens.
If you would like more information please contact Lottie Muir
Phone: +44 (0)20 8849 2407
Email: lottie.muir@cimaglobal.com
