The reform of the UK’s auditor independence framework after the Enron collapse : an example of evidence-based policy making

Fearnley, Stella and Beattie, Vivien (2004) The reform of the UK’s auditor independence framework after the Enron collapse : an example of evidence-based policy making. International Journal of Auditing, 8 (2). pp. 117-138. ISSN 1090-6738

Abstract

Following the collapse of Enron, the UK government set up a high level group of regulators and ministers to co-ordinate a review of the UK regulatory framework, including the key area of auditor independence. The Accountancy Foundation Review Board (Review Board), which was at the time responsible for the independent oversight of the UK accountancy professional bodies, took the leading role in the auditor independence review. A programme of research was set up by the Review Board and studies were provided by other bodies. The results of the research were compiled into a paper which underpinned the Review Board's recommendations for change. This was fed into the government review process. In this paper, the research is summarised and the Review Board's evidence-based recommendations are presented and compared with the government's final position. Few differences are found. Insights are provided into the nature of the regulatory reform process and the quality of the evidence which underpinned it.