The UK Financial Reporting Council (FRC) is
planning to streamline its operations and allow accountants to
settle disputes to help clear a backlog of disciplinary
investigations.
The FRC currently has a number of subsidiary
organisations, including the Accountancy and Actuarial Discipline
Board, the Auditing Practices Board, the Financial Reporting Review
Panel and the Board for Actuarial Standards.
Under the restructuring proposal, these bodies
will merge and be split into two subsidiaries: the Conduct Board
and the Code & Standards Board, which organises bodies by their
function rather than accounting stream.
The aim is to ensure that information between
specialities from different streams, such as audit and accountancy,
can be shared.
Another major plan is to strengthen the
disciplinary process by allowing accountants to negotiate a
settlement in cases where professionals and firms accept there has
been wrongdoing. This is aimed at avoiding disciplinary tribunal
hearings, which are time consuming and have proven difficult for
the regulator to win.
The settlement proposal is also aimed at
reducing a 5-year backlog of investigations.
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By GlobalDataThe investigation into Deloitte’s auditing of
MG Rover for example has taken a long time to begin as the
government investigation had to finish first before the FRC could
proceed.
“There’s the opportunity not to go down a very
lengthy time consuming, costly and also damaging to reputation
process but actually settle earlier and settle quickly,” the
spokesperson said.
“All the work we do is about trying to improve
the quality of reporting and auditing and changing the behaviour.
We’re not the kind of regulator that comes in and just wants to
catch people out, slap them over the wrist and give fines. We
actually want to inform the market about the areas we’re looking
at, we want to work with [the offenders] to improve the quality of
audit.
“So, [the FRC will be] encouraging the firms
to put in place different policies…[such as] changing the processes
in the firm or putting the audit team on better continuing
professional development training and demonstrating that in the
next reporting cycle.”
Other changes include making the FRC more
independent from professional accounting bodies such as the
Institute of Chartered Accountants of England and Wales while
transferring some of the more minor audit oversight duties back to
the institutes.
