TECHNICAL ANALYSIS: Internal control should be principles not rules.

European regulators are at a crossroads with regard to risk management and internal control. Some countries are calling for a Sarbox-type approach, while others want a less restrictive principles-based method. Nick Jeffrey urges finance directors to tread carefully

The European Commission (EC) has notified the European business community that it intends to compel companies to report on risk management and internal control. In March 2005, the Federation des Experts Comptables Europeens (FEE), the representative organisation of the European accountancy profession, issued a discussion paper entitled 'Risk management and internal control in the EU'.

The FEE paper sets out proposals on how the European regulator can build on what Europe's most progressive companies are already doing in the field of risk management and …