Tuesday, April 27, 2004

Accountability? Whose accountability?

The European Commission is starting an open consultation with the public (who?) on whether rules should be tightened up and harmonized across the Union, making executives responsible for their companies’ financial statements. So far as anyone can tell, there is no proposal to make the Commission or its individual members responsible for completely shambolic EU budget, which has not been passed once by the Court of Auditors since the latter’s existence.

The EU has an action plan on corporate governance. It has action plans on many things, all of them consisting of more regulations and every increasing harmonization. As part of this action plan, the Commission has launched an EU-wide consultation on whether executives of companies should be directly accountable for their companies’ financial statements.

Most EU member states consider it to be sufficient to have board members collectively responsible for the reports. The United States has passed stricter legislation in the wake of the Enron scandal.

The Commission thinks the member states’ legislation is insufficient and, in any case, wants to harmonize matters of corporate governance. The open consultation, which will run till June 4 on is not precisely open-ended. In the introduction the Commission states: "The recent scandals have shown that the existing rules are not satisfactory. They should be clarified with a view to reinforce existing rules."

Strangely enough, there is no suggestion that the Commission and its members should be responsible for those extremely dodgy financial statements, the annual EU budget, which the Court of Auditors has not passed once in its existence because of the amount of money that is not accounted for.

For more details, click here (Commission web site)

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