The Government and the FRC, which oversees the accountancy profession, are set to share a batch of radical new proposals.
The Government and Financial Reporting Council (FRC), which currently oversees the accountancy profession, are set to distribute a batch of radical new proposals in order to streamline the FRC.
Currently pursuing 12 investigations into possible misconduct by accountants and Audit firms, the FRC’s record of winning cases has been weak; the new proposals are aimed to strengthen the regulator’s powers to significant new levels.
High profile cases such as the probe into Ernst &Young’s audit of Lehman Brothers and PwC’s vetting of Mayflower’s accounts would be strengthened under new proposed guidelines. Stephen Haddrill, the FRC’s Chief Executive, has suggested that one way the regulator could be strengthened would be to allow them the power to negotiate a settlement, such as a fine with the individual or firm. This would retract the need for tribunal, saving time and money.
To implement such measures would require not the admission of guilt but for the FRC to have more power to demand information. Current legislation restricts the regulator from certain information from the large companies; new proposals will allow the regulator greater power to retrieve this information.
Moreover, the government and the FRC are proposing to make the FRC more independent from the accounting bodies such as the Institute of Chartered Accountants in England. Haddrill is looking for a more focused system that would allow a stronger oversight to the professional bodies allowing for a focus on the larger listed companies. Further radical reforms such as banning auditors from providing consulting services have been opposed; however it is clear that regulation needs a more independent and powerful influence and that change is imminent.