The government has published its response to recommendations made by the Carillion joint inquiry into the contractor’s liquidation.
Published in May, the inquiry’s final report called on the government to carry out an “ambitious and wide-ranging set of reforms” to “reset our systems of corporate accountability”.
In response, the government has produced nine-page document addressing five of the issues raised by the inquiry.
The document does not propose fresh changes, although the government said it would “consider” aspects of some of the recommendations.
Much of its responses cite powers held already by the Financial Reporting Council (FRC), the Insolvency Service and the Financial Conduct Authority (FCA), and offer suggestions for how they could be adapted to address the committee’s suggestions.
MPs’ proposal to set a minimum standard for bonus clawback for all companies was dismissed by the government as being a matter for companies’ shareholders.
The government added that the FRC would publish a revised Corporate Governance Code soon, which would include a “new emphasis” on “independent judgement and discretion” on those authorising bonuses.
Responding to the inquiry’s request for the Competition and Markets Authority (CMA) to consider breaking up the big four accountancy firms, the government said the CMA was “actively considering the issue”.
The inquiry’s accusation that PwC had been “effectively writing its own cheque” its role as special manager in the Carillion liquidation process was addressed by the Insolvency Service rather than the government.
In its report, the joint inquiry had claimed there was no cap on the fee for PwC’s work or clear performance metrics.
The Insolvency Service said the official receiver had agreed a protocol with the accountancy firm and that the fees paid for the work were subject to judicial scrutiny.
On the recommendation that directors other than those with accounting qualifications should be liable for punishments in relation to preparing financial statements, the government said the FRC, Insolvency Service and FCA were working “to improve their current practices”.
In response to the inquiry’s suggestion that the government beef up the FRC’s powers to make it a “more aggressive and proactive regulator”, the government said a memorandum of understanding had been established between the three authorities to ensure they worked together to “make full use of their respective powers”.
Sir John Kingman’s independent review of the FRC, due to report at the end of the year, was also cited by the government as being crucial to assessing whether cultural changes were needed at the financial watchdog.