Question to the Department for Business, Energy and Industrial Strategy:

To ask Her Majesty's Government what plans they have to introduce an equivalent of the US Sarbanes-Oxley Act 2002 in the UK; and what assessment they have made of whether any such legislation would (1) increase confidence in company accounts, and (2) reduce fraud.

The Independent Review of the Financial Reporting Council recommended that government should consider the case for adopting a strengthened framework around internal controls on a similar basis to the Sarbanes-Oxley regime in the US. In response, the Government is exploring options in this area and will bring forward a detailed consultation in due course.

The Review heard that the Sarbanes-Oxley Act, passed in 2002, has led to better financial reporting, with a lower incidence of significant accounting re-statements, but also recognised the higher costs for companies. Any strengthening of the UK regime would need to take account of the UK’s well-established internal control framework comprising interlocking company law requirements, Listing Rules, UK Corporate Governance Code provisions and auditor responsibilities.