More rules to target accounting fraud

The quality and appropriateness of audit reports are set to be bolstered by a new set of audit proposals approved by the International Auditing and Assurance Standards Board, according to a Business Day report. Board chairperson John Kellas said the proposed international standards on auditing accounting estimates (ISA 540) reinforced best practice and caused auditors to give appropriate attention to areas of accounting judgment, such as assumptions and possible bias. The exposure drafts formed part of the international auditing board\'s 18-month programme to redraft existing standards and to develop new and revised standards. Proposed modifications to the code include the expanding of partner rotation requirements and updating requirements relating to the provision of non-assurance services, including setting out additional guidance on the provision of tax services to audit clients. Full Business Day report

In the US, regulators have directed financial firms to step up scrutiny of complex, multilayered transactions. According to Business Report, five federal agencies have issued final guidelines that banks, brokers, dealers and investment advisers should use to avoid deals designed to hide a firm\'s true financial health. \'What the agencies are saying here is that financial institutions need to pay careful attention to exotic transactions that are used for financing sophisticated customers,\' said lawyer Gilbert Schwartz. \'It is fallout from Enron, where certain banking organisations suffered reputational harm from being a participant without fully documenting or understanding the nature of the transactions.\' Full report in Business Report

And in the UK, government efforts to rein in red tape are not expected to stop 2007 being a bumper one for new business regulation. The Financial Times reports that the third EU money laundering directive will have to be incorporated into UK law by December. Banks, accountants and lawyers already covered by existing anti-money laundering rules will have to adopt new procedures designed to restrict further the scope of criminals to launder through the UK\'s financial system. John Davies, head of business law at the Association of Chartered Accountants, said: \'The constant increase in the volume of business regulation in recent years has become a major issue for business. The government has said it is listening to their concerns. Nevertheless, 2006 saw the development of a stream of new measures, which businesses will have to come to terms with during the course of 2007.\' Full Financial Times report