UK compliance super-bill a step closer

The minefield of legislation relating to corporate governance looks set for further complication with the second reading before the House of Commons of the UK Companies Bill.

But while the bill may add to the headaches across boardrooms and for staff who are all 'complianced out' from Sarbanes-Oxley and Basel II, one analyst house is predicting the move is good news for UK companies and may also be good news for those firms selling the technology which underpins governance issues.

The bill, full name The Companies (Audit, Investigations and Community Enterprise) Bill, is touted as being as radical a redressing of - UK-specific - compliance issues as the Sarbanes-Oxley Act (SOX), which comes into effect in November.

But while SOX has been widely criticised the Companies Bill is meeting a far more positive reaction. Critics claim it could genuinely aid UK firms in avoiding the publicised accounting and auditing pitfalls that have famously trapped the likes of Enron, Parmalat and WorldCom in recent years.

In a nutshell, the Companies Bill will impose new measures upon UK firms to ensure all data relating to trades, transactions and all accounting practices throughout the organisation is auditable.

Mike Davis, senior research analyst at Butler Group, said: "The proposed Companies Bill has the potential to benefit UK plc. Not only does it meet the critical requirement of tightening up on auditing and risk for UK business, but also goes further to bring value to shareholders and companies in a way that Sarbanes-Oxley transparently lacks."

Davis said although the UK has always had stronger auditing controls in place than the US the extra measures within the Companies Bill will make for an even tighter ship.

The Butler Group is expecting technology to play a major part in the process of implementing Companies Bill compliance - technologies such as auditing software, business process management, disaster recovery, email management, identity and access management, network security and search tools are all expected to have a role. All this is likely to come at a further cost to businesses.

Despite the Butler Group's positive take on the Companies Bill there is still a lot of negativity in the industry - not least of all that which surrounds firms' abilities to correctly resource the switch to a compliance model.

At the Parliamentary second reading stage the Bill appears in written form for the first time, though it still has a number of bureaucratic hurdles to clear before it can come into effect.