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Objectives
This Bill has two aims: improving confidence in companies
and financial markets; and promoting social enterprise.
Content
The first Part of the Bill:
strengthens the system of regulating auditors by:
- imposing independent auditing standards, monitoring
and disciplinary procedures on the professional
accountancy bodies; enabling the Secretary of State
to delegate to the Financial Reporting Council (FRC)
her powers to recognise the professional bodies;
and securing the FRC's funding through a grant and
a levy power;
strengthens the enforcement of accounting and reporting
requirements by:
- extending the remit of the Financial Reporting
Review Panel so that it can look at interim as well
as annual accounts and reports; giving it a power
to require information from companies it is investigating;
and opening a gateway for the Inland Revenue to
pass information on defective accounts to the FRRP;
- extending the Secretary of State's power to require
more detailed disclosure of non-audit services provided
by auditors to companies; giving additional powers
to auditors to obtain information from companies;
and requiring directors to state that they have
not withheld relevant information from their auditors;
strengthens the company investigations regime by:
- requiring any person to provide relevant information
to company investigators; giving investigators the
right to require entry and remain on premises of a company
under investigation; and providing protection from
breach of confidence claims for people who
voluntarily provide information in certain
circumstances.
The second part of the Bill provides for community
interest companies. The main points are:
- a statutory "lock" on assets and profits of CICs;
- a "community interest test" which companies must
pass in order to be registered as CICs;
- an annual community interest test which CICs must provide
to show how their activities have benefited the
community;
- a CIC regulator responsible for ensuring that CICs
comply with their legal requirements;
Background
The measures to improve confidence in companies and
markets are mostly recommendations from post-Enron
reviews including the Co-ordinating Group on Audit
and Accounting Issues chaired by Melanie Johnson and
Ruth Kelly. They are the final part of the package,
supporting other action already taken such as reform
of the regulatory structure for the accountancy profession
and changes to the Combined Code to strengthen the
role of non-executive directors and audit committees.
The community interest company offers a purpose-made
company vehicle for social enterprise, as recommended
by the Strategy Unit report on the voluntary sector.
Further Information
A copy of the Bill itself can be found at http://www.publications.parliament.uk/pa/ld200304/ldbills/008/2004008.htm
and a copy of the Explanatory Notes, which give a
more detailed explanation of certain aspects of the
Bill can be found at http://www.publications.parliament.uk/pa/ld200304/ldbills/008/2004008.htm
A complete set of Regulatory Impact
Assessments 
(1Mb) covering each measure in more detail, including
an assessment of their impact on business and public
expenditure.
Fact sheets about the Bill
(221 Kb)
Further information on CICs can be found at www.dti.gov.uk/cics
Contact Point
David Williams
Companies (Audit, Investigations, and Community Enterprise)
Bill
UG 28
Department of Trade and Industry
1 Victoria Street
London
SW1H 0ET
Telephone: 0207-215-5381
e-mail: david.f.williams@dti.gsi.gov.uk
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