Crisis ups accounts pressure on the non-execs

Days before the end of many businesses' financial year, the Financial Reporting Council,
which oversees the accuracy of listed company accounts, has rushed out a list of more than 30
issues for part-time directors sitting on audit committees to tackle, to ensure reporting rules are not breached.

Issuing the alert, FRC chief executive Paul Boyle said: "Corporate reporting and auditing will be particularly challenging this year, and
needs to be matched by increased diligence and then clarity as to the basis on which judgments have been exercised."

The clampdown comes after the Northern Rock fiasco in which a non-executive board of blue bloods and experienced financial people, including the land-owning son of Viscount Ridley and heiress and hedge fund manager Nichola
Pease, have been criticised for not properly overseeing the lender.

It also follows the already increased demands on non-executives working on audit committees
after the scandal in the US that led to the collapse of energy giant Enron to make sure they fully understand financial reporting standards and responsibilities.

The increased responsibilities, under which directors can become liable for reporting or auditing foul-ups, has been said to have put
many off taking up non-executive roles in public companies, and instead opting to work in the more
opaque world of private equity.

The council said in a statement: "The FRC believes that recent credit-market conditions mean that the risks to confidence in corporate
reporting and governance are higher than they have been for some years.

"The FRC believes that increased risks require additional diligence on the part of preparers
of accounts, members of audit committees and auditors this year."

The audit committee is meant independently to steward the relationship between a company's
executives and finance department and the external auditor.

The FRC says the liquidity of financial institutions and the availability of credit to companies in general are key issues.

Its Review Panel, which has the power to punish companies whose reporting falls short, has already warned that it is in a state of high
alert.

The panel last month put dozens of companies on notice that they will be under special watch, saying that it will be looking at the accounts
of banks and other financial institutions, retailers, housebuilders, property companies and
businesses in travel and leisure.