Patricia Hewitt has announced a "complete and comprehensive" plan to tighten accountancy standards and shake-up City boardrooms.

"This overall package is tough where that is needed. But measured and proportionate throughout," she told MPs.

Forum Response: Institute of Directors

Derek Brownlee, tax executive for the IoD, told ePolitix.com: "It is essential for the proper functioning of the market economy that the accountancy profession operates in a professional manner and is seen to do so. Public confidence is crucial and an effective regulatory regime is an essential part in maintaining this. However, we see no need for thatregulatory regime to be operated by the government."

Forum Response: CIMA

A spokesman for CIMA told ePolitix.com: "The report of the review of the regulatory regime of the accountancy profession represents an important move forward. It is tough, but fair,"

"We will be studying the detail of the report in the coming weeks, but we are keen to see an appropriate, constructive approach to regulation and look forward to seeing the debate move forward rapidly."

Forum Response: ACCA

Roger Adams, executive director-technical for ACCA, said: "ACCA agrees that an outright ban on all non-audit services will do more harm than good, by driving quality down and costs up. But listed company audit committees should be required to approve non-audit services in advance and to report to investors, both on the nature of those services and on the steps taken to ensure that no conflicts of interest exist.

"There should also be full disclosure of fees in the financial statements. Without these measures, there is little to prevent cosy relationships between companies and their auditors from continuing unchecked."The US Sarbanes-Oxley Act requires pre-approval of non-audit services. Patricia Hewitt has said that the UK has been able to avoid hasty legislation of this kind because it started from a better position. But these proposals risk leaving the UK lagging well behind the US in corporate governance."

Anthea Rose, chief executive for ACCA, said: " We have never taken the complacent view that such events could not be repeated in the UK. We have become very concerned that the UK regime is over-complex, with too many regulators tripping over each other, duplicating effort and clouding accountability.

"The Financial Reporting Council is a respected, independent organisation with a proven track record. Unlike the Accountancy Foundation, its credibility as a regulator is not jeopardised by funding which comes exclusively from the accounting profession.""In principle, we believe that standard setting should be separated from enforcement. But it will be perfectly possible to accommodate this separation in a structure of separate boards operating under the overall FRC umbrella. The public interest demands that we combine accountability and clarity of purpose with strong and effective regulation."