Patricia Hewitt has set out far-reaching plans to guard against an Enron or WorldCom scandal in the UK.

The government is to consider compelling companies to rotate their audit firms, and may restrict the ability of the audit companies to offer non-audit services to their clients.

Forum Response: Chartered Institute of Management Accountants

Charles Tilley, chief executive if CIMA, told ePolitix.com: "We are delighted that the government's Coordinating Group has proposed that the Audit Committee be made up entirely of independent non-executive directors and that the role of the committee is strengthened and enhanced.

"CIMA believes that it is absolutely essential that the Audit Committee takes responsibility not just for the appointment of external auditors, but also for internal auditing. This responsibility will enable non-executive directors to effectively represent the needs of stakeholders in auditing.

"Training for non executives is also a welcome proposal. Non executive directors need to understand fully their responsibilities. CIMA also believes that non-executives need to be financially literate. Auditors must be rigorously challenged by non-executive directors, and this is the responsibility of the non executive directors. If they do not understand the numbers, they won't be able to ask the right questions - nor will they understand the answers.

"Ultimately, any move towards auditor independence must be grounded in a solid corporate governance framework with total accountability of company boards. It is critical that companies provide stakeholders with a meaningful and balanced picture, not only of financial but also non-financial information and future business strategy.

"Auditor independence must be viewed within the totality of corporate governance and the accountabilities of organizations to their stakeholders. The external audit is one element of the overall risk management of an organisation.

"It must be linked with other constituent parts of risk management including the determination of the Board's appetite for risk, an appropriate risk management process, an effective internal audit function, and an open disclosure of - and timely resolution of - conflicts of interest. Failure to do this will inevitably lead to ineffective protection for stakeholders."

Forum Response: Institute of Directors

George Cox, director general of the IoD, told ePolitix.com: "Whilst many of the reforms have merit, it is important to set this in context. The situation in the UK is very different from what we are seeing in North America. Any suggestion that such measures are necessary 'to stop an Enron happening here' is entirely misplaced.

"Whilst the IoD believes standards should be continuously driven up, it is important to recognise that standards of governance in the UK are arguably the highest in the world. They should be seen as one of the reasons why people should invest in UK companies and through UK regulated bodies.

"At this time we should be championing not questioning our corporate governance environment - a drought in California should not lead to a hose-pipe ban in London."