Chartered accountants in Bermuda have voted in new auditor independence and professional standards requirements.

The net effect of the changes ? adopted in the interest of protecting the public ? are higher professional and ethical standards for all of the Island's practising professional accountants.

Although the changes were already being looked at by the time such high-profile corporate scandals as Enron and WorldCom were revealed, scrutiny of the accounting industry has intensified after investors lost millions when corporations distorted the numbers on their books.

Stronger internal financial controls, and checks of those controls, have followed, and all accounting professionals ? whether auditor, company director or CFO ? are expected to follow Generally Accepted Accounting Principles (GAAP), and not their own interpretations of how a company's income and expenses should be reflected on the balance sheet.

Institute of Chartered Accountants of Bermuda (ICAB) president Andrew Parsons, said members voted in the new regulations in November, and that they went into effect on January 1.

Mr. Parsons said the new regulations also allowed for ICAB to discipline offenders, with penalties being based on the severity of the offence and ranging from fines to being stripped of one's professional accounting designation.

ICAB, established on the Island in 1973, is a body that all professional accountants practising in Bermuda belong to. The organisation is affiliated with the Canadian Institute of Chartered Accountants, and the same regulations were recently adopted by all CAs throughout provinces in Canada, with the exception of Quebec where the government has the say.

Mr. Parsons, and others involved with ICAB, said it was essential from a business perspective, that Bermuda be in step with other jurisdictions in ensuring the highest standards were practised.

"This is one of the things that has enabled Bermuda to grow into an international business jurisdiction," he said, stressing that Bermuda's accountants have historically been proactive rather than reactive when it came to standards governing the industry.

Steve Green, KPMG Bermuda managing partner and a member of ICAB's council, is head of the organisation's committee to ensure there is full compliance with the new independence requirements.

Mr. Green said that although the independence of auditors has been much talked about since corporate scandals like Enron, changes were already in the works.

He conceded that the corporate controversies and the regulator scrutiny that followed, may have sped up the process of implementing change, but said it was not a "knee-jerk" reaction. "The process began in June, 2001, " he said.

Mr. Green said the standards now in place followed consultation with auditors, analysts, academics and financial statement preparers, and also took into account independence rules that were already in place for the profession.

Although the new regulations build on existing independence regulations, the level of guidance now given to auditors on ensuring independence is reportedly greater. Changes to the rules also take into account Sarbanes-Oxley's regulations (which require company CEOs and CFOs to personally attest to the validity of their financial results), that are binding on US publicly listed companies and the standards of the International Federation of Accountants (IFAC).

In addition to the more stringent independence regulation in place, the second requirement voted in is designed to ensure that accountants not practising audit are also in compliance with professional standards

Specifically, afirm engaged in the practice of public accounting has to perform professional services in accordance with generally accepted standards of practice of the profession.

This regulation bears on those preparing and approving company financial statements, and that accountants who sit on a company's audit committee and board must "carry out that responsibility with the care and diligence of a competent chartered accountant, enhanced by the skills and knowledge derived from the members' own career".