Select Committee on Treasury Appendices to the Minutes of Evidence


Memorandum submitted by the British Bankers' Association

  Thank you for the invitation to submit evidence to the Treasury Committee inquiry into the financial regulation of public limited companies in light of the collapse of Enron.

The British Bankers' Association is the principal representative body of UK and overseas banks operating in the UK. In that capacity we have participated in the development of the financial regulation of public limited companies as defined by the companies legislation, financial reporting standards and codes of corporate governance. Our members have a financial interest in public limited companies and are themselves subject to the rules that apply.

In pursuing its various lines of inquiry, we believe that the Treasury Committee should bear in mind the tremendous progress made over the past decade in the UK in the areas of corporate governance, auditing and financial reporting following the high profile corporate failures of the late-Eighties and early-Nineties. This includes the work of the Cadbury Committee on Corporate Governance and subsequent review bodies, the Auditing Practices Board and the Chartered Accountants Joint Ethics Committee, and the Accounting Standards Board and its associated bodies.

It also needs to be appreciated that the rules governing financial regulation are constantly evolving and that significant developments in corporate governance, auditing and financial reporting were already in hand before the collapse of Enron. Without doubt, the issues raised by Enron give a fresh impetus to these initiatives and invite consideration of whether any aspects of the collapse necessitate yet further measures or require a change in direction. To this effect the European Union has announced a programme of action and the Government has established high level reviews on the role and effectiveness of non-executive directors and on financial reporting and audit issues.

The attached submission comments on these issues in more detail and, over the forthcoming months, the BBA will be providing input to the various reviews and commenting on specific proposals as they arise.


  1.  The British Bankers' Association is grateful for the opportunity to set out its views on the financial regulation of public limited companies in the UK.

2.  We note that at the informal Ecofin meeting in Ovieta in April, Finance Ministers, the European Commission and Central Bank Governors concluded that, while the collapse of Enron raised international policy issues of significance for the integrity of financial markets, they considered that most of the key regulatory issues highlighted by the case were being tackled by existing EU initiatives within the Financial Services Action Plan. This included the planned adoption of International Accounting Standards (IAS) by listed companies in Europe by 2005 and the adoption of a Commission Recommendation on auditor independence.

3.  It was nevertheless further determined that:

    —  a new Communication should be prepared on the future EU auditing strategy, covering issues such as auditing standards, public oversight and Audit Committees;—  the Committee of European Securities Regulators (CESR) should report on financial market issues in relation to complex derivatives and hedge funds;—  the Commission should assess the roles of financial analysts and credit rating agencies and possible measures to improve their participation in the market; and that—  the remit of the High Level Group of Company Law Experts should be extended to the review of issues related to best practice in corporate governance[4].

4.  This activity is in addition to consultation that is already taking place on the development of a European Directive or Regulation on enhancing transparency in the European securities markets, which is seeking to address issues concerning the frequency and timeliness of published financial information[5]. Moreover, a major review of companies legislation is currently underway in both the UK and at the EU level and two high level Government reviewshave been announced:

 13 April 2002.

5.  It would therefore seem that no stone will be left unturned in determining whether the circumstances of the collapse of Enron have ramifications for the various elements of tbe system of financial regulation under which UK listed companies operate. Our initial view is that we do not perceive a need for broad institutional change, but recognise that weaknesses identified in the US financial regulation arrangements may necessitate changes in the EU and UK arrangements as part of the on-going process of development.

6.  In the following section we identify the primary information available about Enron's collapse and outline some of the factors that we believe contributed to the collapse. We then provide a commentary on the current state of financial regulation in the UK, including corporate governance, the conduct of the audit and auditor independence, financial reporting and certain regulatory issues. In closing; we underline the need for there to be a full understanding of the nature and impact of the various circumstances that contributed to Enron's collapse before final decisions are made about additional regulatory measures. But we nevertheless make a number of recommendations for action that the Treasury Committee may care to consider.INFORMATION ABOUT ENRON'S COLLAPSE

7.  A full independent analysis of the interaction of the different factors sunounding Enron's collapse will not be available until the US SEC has completed its investigation. Information so far available about the events that led to the collapse, however, includes:—  The 16 October 2001 announcement of after-tax recurring charges of $1.01 billion. This comprised $287 million relating to asset impairments recorded by Azurix Corp, $180 million associated with the restructuring of Broadband Services and $544 million related to losses associated with investments including The New Power Company, broadband and technology investments and the early termination of structured finance arrangements involving LJM 2.—  The 8 November 2001 filing of an SEC Fonn 8-K Report which reported:

      —  a restatement of prior period earnings involving a $1.2 billion reduction in shareholders equity as a result of Enron determining that three previously unconsolidated special purpose entities (SPEs) should have been consolidated under US GAAP—Chewco, JEDI and LJM 1;

      —  the financial participation in LJM 1 and LJM 2 of Enron's Chief Financial Officer and an estimation that he had received monies in excess of $30 million; and

      —  the appointment of William Powers, Dean of the University Texas School of Law, to the Board to conduct an investigation into transactions between Enron and related parties.—  The Report of the Special Investigations Committee to the members of the Board of Enron.[6]

8.  The remit of the Special Investigations Committee was to investigate transactions between Enron and investment partnerships created and managed by Enron's Chief Financial Officer. From this report and the preceding announcements it is possible to build up a picture of a number of factors which contributed to one degree or another to Enron's collapse:—  It would seem an error of judgement for the Board to have approved entering into business relationships with the LJM partnerships in which Andrew Fastow, Enron's Chief Financial Officer, would manage and control the complex arrangements and participate as an investor.—  The controls established by the Board to mitigate conflicts of interest, would appear insufficient and were not properly implemented. This included oversight by both the Board and senior management and specific instruction to the Audit and Compliance Committee to conduct annual reviews of all LJM transactions.—  The report considers the Board and others to have been dilatory in asking Andrew Fastow to provide an account of the payments he received from LJM 1 and LJM 2 and suggests that he placed his own personal interests and those of the LJM partnerships ahead of Enron's interests.—  The events raise the questions of whether the auditors failed in their basic auditing duties and crossed the boundary of auditor independence.—  SPEs were created with the objective of meeting the bare minimum requirement of 3 per cent outside equity interest in order for them to remain off-balance sheet. Enron, however, ultimately breached the US consolidation rules, in some cases through failing to meet the equity requirements and in others through not meeting criteria based on control and risk and reward.—  The SPEs were used with the primary objective of creating a conduit through which Enron could take advantage of the strength in its own share price by entering into transactions with "third parties" to counterbalance losses in merchant investments. These transactions served an accounting purpose but had no economic foundation.—  Enron managed to put itself in a position of placing "management's best estimates" on vast derivative contracts for which there were no deep and liquid markets.—  Contracts were bundled to enable the revenue recognition of future services.—  Accounting policies were reversed without explanation and basic errors made.UK FINANCIAL REGULATION

9.  Following the high profile corporate failures of the late-Eighties and early-Nineties, a concerted effort has been made to enhance the quality of financial regulation applicable to public limited companies. This includes the work of the Cadbury Committee on Corporate Governance and subsequent review bodies, the Auditing Practices Board, the Chartered Accountants Joint Ethics Committee (CAJEC) and the Financial Reporting Council and the bodies reporting to it—the UK Accounting Standards Board (UK ASB), the Urgent Issues Task Force (UITF) and the Financial Reporting Review Panel (FRRP).

10.  The rules governing financial regulation are constantly evolving and significant developments in corporate governance, auditing and financial reporting were already in hand before the collapse of Enron. We are in the middle of a major review of companies legislation and, in addition to this, the Government has announced two high level reviews: on the role and effectiveness of non-executive directors; and on financial reporting and audit issues. UK plcs will also be subject to any changes agreed at an international or European level.

Corporate governance

  11.  In January 2002 the European Commission published a Comparative Study of Corporate Governance Codes Relevant to the European Union and its Member States[7]. From this, it can be seen that of the 35 codes of corporate governance in existence in EU Member States, the UK accounts for 11 and, in addition, UK companies are party to two international and two pan-European codes. (Appendix 1 lists these). The UK also has the longest history of defining corporate governance by voluntary code, accounting for six of the 10 pre-1998 codes.

12.  Of the codes applicable to UK plcs, it is the Combined Code on Corporate Governance that has greatest prominence. It is widely adhered to and at the time of the development of the preceding Cadbury Report, in 1992, there was a lively debate on whether corporate governance could be improved principally through voluntary codes based on best practice or whether a detailed underpinning of primary legislation was needed. Overall, we believe that much has been achieved through the development and adoption of codes. While "voluntary", it is of course a requirement of the Listing Rules of the Financial Services Authority that companies report to shareholders on whether or not they have complied with the provisions of the Combined Code. This "comply or explain" approach has demonstrably worked.

13.  The requirements of the Combined Code have a qualitative element that would be difficult to express in statute and the model that it provides has been drawn upon across Europe. Since its introduction, experience has also shown that where large plcs have not followed key aspects of the code, institutional investors and other market participants have made their views known and the pressure applied has usually resulted in significant departures being addressed.

14.  The UK also has high standards of disclosure about directors' remuneration, developed within the Greenbury Report and subsequently incorporated into the Combined Code and made a requirement of the Listing Rules. Part I of Schedule 6 to the Companies Act 1985, as amended by the Companies Act 1989 and Statutory Instrument 1997/570, also puts in place legal requirements that apply to listed and unlisted companies. In addition, UITF Abstract 10 "Disclosure of Directors' Share Options" requires that extensive information be given on the granting and exercise of directors' share options.

15.  Significant changes were already in hand in respect of the disclosure of directors' remuneration within the context of the UK Company Law review. It is proposed that for accounting periods ending on or after 31 December 2002 listed companies will be required to produce a new statute-based directors' remuneration report and that the report should be put to an advisory shareholder vote. While concern has been expressed about the complexity of the proposed report, eventual implementation of the proposals will enhance further the disclosure of directors' remuneration and accountability to shareholders.

16.  Moreover, the Goverment has announced that it intends to initiate an independent review of the role and effectiveness of non-executive directors that will report jointly to the Secretary of State for the Department of Trade and Industry and the Chancellor of the Exchequer. This is in addition to the various reviews on financial reporting and audit issues that are now to be co-ordinated by the group drawing together the DTI, Treasury, FSA, ASB and Accountancy Foundation. This will oversee planned reviews impinging on Company Law, the Listing Rules, Financial Reporting Standards and the arrangements underpinning auditor independence.Together with the investigation by the Treasury Committee, these will provide an appropriate opportunity to review the UK's corporate governance arrangements in light of Enron. The April 2002 consultative document on European company law issued by the High Level Group of Company Law Experts also signalled the intention of improving corporate governance arrangements on a pan-European basis[8].

17.  It is our understanding that corporate governance and disclosures about directors' remuneration are more advanced in the UK than in the US. For example, while major US companies operate under individual codes of conduct, the US has not yet gone through the standardisation process that produced the Combined Code and with it the greater appreciation of the expectations placed on companies by the marketplace.

The conduct of the audit and auditor independence

18.  The Auditing Practices Board spent much of the Nineties reviewing issues concerning the role of auditors and the substance of auditing standards, encompassing issues such as fraud and error, consideration of law and regulations and the going concern basis of financial statements.

19.  In addition to this, CAJEC consulted widely on issues concerning auditor integrity, objectivity and independence. This resulted in an ethical code aimed at underpinning the professional conduct of auditors. It also led CAJEC to conclude that, while compulsory audit firm rotation would work against the operation and quality of the audit, independence would be served by requiring the compulsory rotation of lead audit partners. The period set for this was every seven years.

20.  On the question of the provision of audit and non-audit services, no specific limits were placed on activity beyond the overriding duty of independence. Under the provisions of the Combined Code, however, the Audit Committee is charged with overseeing the relationship with the auditors and reviewing the nature and extent of non-audit services. The Audit Committee must satisfy itself that the independence and objectivity of the auditor is not in question. Auditing standards require that the engagement partners disclose in writing to the Audit Committee all relationships between the audit firm and the client that may reasonably be thought to bear on the firm's independence and objectivity, including the provision of non-audit services. Since 1991 it has been a requirement of Section 390 of the Companies Act 1985 that audit and non-audit fees be disclosed.

21.  The European Commission has this month published a Recomendation on auditor independence[9]. The recommendation is principles-based and aims primarily to establish that auditors should not place themselves in a position where their independence could be brought into question. It attaches conditions to the provision of certain non-audit services by auditors and calls for the replacement of key audit partners every seven years. The recommendation also sets out expanded disclosures on audit and non-audit fees. The recommendation would seem broadly compatible with the existing UK approach but would require redefinition and development.

22.  New arrangements have been put in place in the UK to strengthen the independent regulation of the accountancy profession. This has included the establishment of a new Accountancy Foundation with overarching responsibility for a new Auditing Practices Board, Ethics Standards Board and Investigation and Discipline Board. The new framework also includes a Review Board whose task is to monitor the operation of the new system to ensure that it fully serves the public interest ``in maintaining and enhancing the standards of work and of conduct of accountants''. In February 2002, the Accountancy Foundation Review Board published "Protecting the Public Interest" introducing its work programme. This gave a commitment to the Ethics Standards Board giving priority to reviewing issues concerning auditor independence.

23.  The US has similarly this month determined that it needs to change its arrangements for the regulation of the audit profession. The General Accounting Office has reported to Congress that it has concluded that the system of self-regulation by the SEC has not been effective and that there is a need for a new public body to oversee the accounting profession's responsibility for auditing public companies[10]. The GAO has determined that this new, body should be independent of the accounting profession and have standard setting, oversight and disciplinary authority. This bears similarity to the responsibilities of the Accountancy Foundation.

24.  Enron clearly calls for a review of auditor independence and the regulation of the profession, In considering issues concerning auditor independence, however, changes already in hand should be borne in mind, as should the heavy price that the market has exacted from Andersens and the effect that this can be expected to have on practice generally. On regulation, we believe that the new system of non-statutory indepedent regulation under the Accountancy Foundation needs to be given time to develop. This said, it would clearly be appropriate to maintain a watching brief on the new US arrangements and to consider whether there are aspects that could usefully be built into the UK regime.

Financial reporting

25.  Since its inception in 1990, the UK ASB has worked tirelessly in improving the quality and coverage of UK accounting standards. In addition to issuing 19 financial reporting standards (FRS), it has developed an overarching Statement of Principles and a voluntary Operating and Financial Review. The UITF and the FRRP have both served to reinforce the application of standards.

26.  In latter years, work on UK accounting standards has been undertaken hand-in-hand with the development of international accounting standards. In Spring 2000 the Lisbon Council determined that all listed companies in Europe should follow international accounting standards by 2005. The intention behind this is to improve transparency across European capital markets by putting in place a single set of accounting and disclosure requirements. This has resulted in a further round of quality review and upgrading of standards and the work programmes of both the UK ASB and the International Accounting Standards Board (IASB) includes subjects for which the circumstances of the collapse of Enron will be relevant.

27.  US standards and their UK and international equivalents differ considerably in content and approach. In particular, US standards tend to be more specific and usually include detailed implementation guidance. From a US perspective it is considered that the detailed guidance eliminates uncertainty, provides a clearer blueprint for the audit, a defence in litigation and a better base from which securities regulators can enforce the rules. Many outside the US, however, consider its approach to be excessively bureaucratic and believe that the detail encourages a "tick box" approach to the preparation of accounts and their audit.

28.  This was commented upon in the statement made by Sir David Tweedie, Chairman, International Accounting Standards Board, before the Committee on Banking, Housing and Urban Affairs of the United States Senate, on 14 February 2002:

    ". . . adding the detailed guidance may obscure, rather than highlight, the underlying principle. The emphasis tends to be on compliance with the letter of the rule rather than on the spirit of the accounting standard. We favour an approach that requires the company and its auditor to take a step back and consider whether the accounting suggested is consistent with the underlying principle. This is not a soft option. Our approach requires both companies and their auditors to exercise professional judgement in the public interest. Our approach requires a strong commitment from preparers to financial statements that provide a faithful representation of all transactions and a strong commitment from auditors to resist client pressures. It will not work without these commitments."

29.  Under UK FRS 5, "Reporting the Substance of Transactions", it is established beyond doubt that it is the substance of transactions and not their legal form that determines their accounting treatment. In determining the substance of a transaction, "all its aspects and implications should be identified and greater weight given to those more likely to have a commercial effect in practice. A group or series of transactions that achieves or is designed to achieve an overall commercial effect should be viewed as a whole." Where an entity has a quasi-subsidiary ``the substance of the transactions entered into by the quasi-subsidiary should be reported in consolidated financial statements''. Detailed rules are set out on determining whether a transaction has given rise to an asset or liability for the reporting entity, based on the concept of the right or other access to benefits and exposure to the risks inherent in those benefits.

30.  This is distinct from the US approach where the test for non-consolidation—or off-balance sheet treatment—is based on the control of the SPE, and possession of the risks and rewards of owning the SPE's assets, belonging to an independent third party that has made an equity investment of at least 3 per cent of the SPE's total capitalisation. This is generally regarded as having attracted a legalistic rather than an economic assessment of whether an SPE can exist off-balance sheet. It should, however, be borne in mind that Enron's 8 November restatement resulted from it having concluded that its non-consolidation of certain SPEs was in contradiction of US accounting requirements.

31.  It is also the case that UK entities with listed or publicly traded capital instruments are required under FRS 13 "Derivatives and Other Financial Instruments: Disclosures" to provide detailed disclosures about the impact of financial instruments on their risk profile, how those risks might affect the entity's performance and financial condition, and how those risks are being managed. This has resulted in financial and non-financial institutions providing substantial information on their borrowings and financial liabilities, their currency and interest rate exposures, the fair value of financial instruments, hedges of future transactions and gains and losses on hedges.

32.  UK standards are also underpinned by a statutory requirement that accounts present a true and fair view and this is the basis on which the audit opinion is made. The international framework encompasses the true and fair concept, but no equivalent exists in US GAAP. Directors are also required to certify that the entity is a "going concern" and to confirm that all material disclosures have been made. These certifications are encapsulated in statute and give rise to a legal liability on the part of the directors.

33.  We stand full square behind the application of IAS by listed companies in Europe by 2005 and believe that IAS have the potential of becoming globally accepted. We acknowledge that in broad terms they endeavour to be principles-led and consider both IAS and UK FRS place a greater emphasis on accounts reflecting economic substance, rather than simple legal form, than their US equivalents. This has to be right as, in hindsight. Enron failed within the environment of the most detailed and prescriptive accounting rules in the World. What is needed in our view is much more of a "top down" approach in which directors are placed under an obligation to gjve a clear and transparent account of the financial standing of the company for which they have responsibility.

34.  In looking ahead, however, we consjder that the circumstances of Enron's collapse are likely to be highly relevant to the development of individual IAS in significant areas:—  The banking industry has been highly critical of IAS 39 "Financial Instruments: Recognition and Measurement". We believe that it bears too close a resemblance to the rules-driven US SFAS 133 "Accounting for Derivative Instruments and Hedging Activities". We hold the view that its detailed rules stand in the way of sound risk management and that adherence to the standard requires entities to enter into transactions for accounting—rather than economic—reasons. Over the years we have been continually frustrated by the unwillingness of the IASB and its predecessor body to undertake a proper review of this standard which most consider was adopted in haste and without due process. The publication this month by the ASB of a draft hedge accounting standard based on principles may constitute progress, but only if its approach is adopted by the IASB[11].

—  Given that $763 million of Enron's $979 million profit in the year ending 31 December 2000 was based on `management's best estimates', the IASB should review afresh the banking industry's long held concern about the proposed use of fair value measurement for contracts held over the longer term in the absence of deep and liquid markets.[12]—  Revenue recognition—including questions concerning the accounting treatment of income associated with the provision of future services—and consolidation. In considering the role played by Enron's use of SPEs, we note that the initial view of many including ourselves is that the UK and IASB regimes would have required the consolidation of Enron's SPEs. This no doubt is an assumption that merits consideration in light of the planned development of the IAS rules.

Regulatory issues

  35.  As Enron was not regulated as a financial institution, its collapse does not provide any evidence that the regulation of financial institutions as such needs to change in either the US or the UK. However, it does raise the question of whether non-financial institutions that are trading heavily in financial instruments should be regulated by the Financial Services Authority or equivalent bodies overseas. This is an issue that CESR have been asked to report on, taking into account work undertaken previously by the Financial Stability Forum (FSF) and following consultation with the European Securities Committee. In this regard, we note that in its consideration of issues raised by highly leveraged institutions following the collapse of Long Term Capital Management, the FSF did not deem regulation to be appropriate but instead leaned towards transparency achieved through public disclosure[13]. The FSF's view, however, is very much influenced by developments specific to hedge funds and it is possible that it would draw different conclusions in respect of non-financial institutions trading in financial instruments.

36.  Attention has also focused on the role of financial analysts and credit rating agencies and the European Commission is to assess whether there are measures that would improve their participation in the market. In addition to this it is understood that the FSA is considering the role of analysts working within investment firms who may face potential conflicts of interest, including an examination of arrangements for ensuring that Chinese Walls are sufficient]y robust. In a speech to the Canada Club on 22 May, the Chairman of the FSA is reported to have observed that 'there is some evidence that broker recommendations in the UK are more balanced than in the US'. He nevertheless took the view that the FSA's rules on managing conflicts of interest may not be as clearly defined as they need to be. It is understood that the FSA is working on a discussion paper on this.CLOSING REMARKS AND RECOMMENDATIONS

37.  From information so far available it can be seen that a number of complex and overlapping factors lead to Enron's collapse: ineffectual leadership, conflicts of interest on the part of senior management, poor auditing, inappropriate accounting and possibly fraud. In determining what action to take, therefore, it is important that we first gain an understanding of the nature and impact of each of these factors in determining measures that should be introduced with the objective of reducing the likelihood of a similar collapse reoccurring. We need to discern the extent to which failings resulted from the regulatory framework and rules themselves or the way in which they were or were not applied. Care needs to be taken to avoid adding unnecessarily to the regulatory burden and account taken of differences in the US and UK regulatory environments.

38.  It also needs to be borne in mind that substantial effort has been made to enhance the quality of corporate governance, auditing and financial reporting in the UK in recent years. This is an ongoing and never ending process. While there can be no grounds for complacency, we see no need for a radical overhaul of the UK system of financial regulation. Instead we believe that the factors contributing to Enron's collapse should guide thinking in instances where they are seen as being relevant.

39.  The BBA looks forward to engaging in the dialogue about the need for specific measures in the context of the various reviews mentioned in this submission. At this stage, our recommendations would be that:—  In reviewing the standards of corporate governance in this country and the role played by non-executives, we should not seek to add to the structure but instead consider whether there are means by which roles can be better defined and effectiveness assured. We should review whether the obligations placed on non-executive directors are sufficiently clear and consider further the role and operation of Audit Committees. There may also be a case for reconsidering issues such as the independence, expertise and time dedication of non-executive directors.—  As part of the review of the Listing Rules we should review the disclosures made under the Combined Code on the role and operation of the Audit Committee.—  Priority should be given to acting upon the measures contained in the European Commission recommendation on auditor independence, including the conditions attached to the provision of non-audit services, the replacement of key audit partners and the enhanced disclosures on audit and non-audit fees.—  Consideration should be given to whether any of the arrangements for the oversight of the accounting profession's responsibility for auditing public companies to be introduced in the US should be reflected in the way in which the Accountancy Foundation is formed or operates.—  In preparing the new, mandatory Operating and Financial Review, the UK Accounting Standards Board should include an overriding requirement for transparency. OFRs should be written in Plain English and should provide a balanced and objective view of the company.—  In developing accounting standards, the specific question of whether or not the changes would facilitate Enron-type activity should be asked. This would seem particularly relevant to work currently being undertaken on financial instruments, fair value, revenue recognition and consolidation. We would in particular recommend that the IASB undertake a root and branch review of IAS 39 with a view to transforming it into a principles-based standard and takes a fresh look at whether there are natural boundaries to the relevance of the fair value measurement of financial instruments.

24 May 2002

4   Press release reporting on the informal Ovieta Ecofin and meeting note "A first EU response to Enron related policy issues", Back

5   "Towards an EU regime on transparency obligations for issuers whose securities are admitted to trading on a regulated market-second consultation by the services of the internal market directorate-general of the European Commission"; "Securities: Commission launches further consultations on information that publicly traded companies must disclose" DN:IP/02/684, 8 May 2002. the independent review of the role and effectiveness of non-executive directors that will report jointly to the Secretary of State for the Department of Trade and Industry and the Chancellor of the Exchequer; and- the co-ordinated review of accounting and auditing issues by the DTI, HM Treasury, the Financial Services Authority, the Accounting Standards Board and the Accountancy Foundation. Back

6   Enron documents are available from; the Special Report was completed on 1 February 2002. Back

7   "Comparative Study of Corporate Governance Codes Relevant to the European Union and its Member States", Final Report on bebalf of the Internal Market Directorate General of the European Commission, by Weil, Gotsal & Manges, January 2002 Back

8   "A Modern Regulatory Framework for Company Law in Europe: A Consultative Document of the High Level Group of Company Law Experts". 25 April 2002. Back

9   European Commission recommendation "Statutory Auditors' Independence in the EU: A Set of Fundamental Principles". Back

10   "Securities Markets-Competition and Multiple Regulators Heighten Concerns about Self-Regulation", US General Accounting Office report to Congressional Committees, May 2002. Back

11   UK Financial Reporting Exposure Draft 23 "Financial Instruments: Hedge Accounting", issued for comment on 15 May, is currently under review. Back

12   Enron Annual Report 2000. Back

13   See "The: FSF Recommendations and Concerns Raised by Highly Leveraged Institutions (HLIs): An Assessment", 10 March 2002. Back

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