Much hand wringing followed the high profile failures of companies like Carillion, BHS and Patisserie Valerie over the last few years. Promises were made that the rules around audit, risk and internal controls within companies would be toughened up, to ensure that such business collapses were not repeated. But has the Government lost its nerve and diluted proposals to make directors more accountable for failures in corporate governance?

It seems that way, certainly for smaller companies. It is reported that the original plans were for directors to be subject to new statutory responsibilities to sign off on the effectiveness of internal company controls (similar to the position in the US under the Sarbanes-Oxley Act). The proposed UK version of the rules has been watered down. The new rules will probably now be contained in the UK Corporate Governance Code (which is not legally enforceable and which only applies to companies with a premium listing on the London Stock Exchange).

Is this fair? Some would argue that the buck should stop with management, and directors should be in the best position to police internal controls on financial reporting. But all company directors, regardless of the size of company, do have responsibilities under the Companies Act 2006 to provide information or explanations to auditors, and perhaps the answer lies in stricter enforcement rather than new legislation.

There will always be a tension between the role of company directors in enforcing financial controls, and the role of accountants in blowing the whistle on anything they deem suspicious. For now, at least, it seems the burden will still fall on accountants and auditors to raise any red flags.