Accountancy watchdog cannot follow up on BHS inquiry as requested because it's being asked to investigate people who aren't actually accountants

Hayley Kirton
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Perhaps unsurprisingly, the accountancy watchdog only has powers over those in the accountancy industry (Source: Getty)

The accountancy watchdog today declined to investigate the BHS collapse as thoroughly as one professional body has requested it to, on the grounds that such a probe would fall miles outside of its remit.

Responding to a letter from Simon Walker, director general of the Institute of Directors, the Financial Reporting Council's (FRC) chief executive Stephen Haddrill stressed that his organisation has a limit on what approaches it could take in any eventual investigation it may launch.

In particular, Haddrill pointed out that the FRC only held investigations into the work of accountants, auditors and actuaries and, therefore, did not hold any power over anybody who was not a member of any corresponding professional body.

Read more: BHS staff may wait two years to know if their pension scheme is in the PPF

Haddrill's letter also noted that the FRC's UK corporate governance code only extended as far as companies with a premium list and therefore it could not launch an investigation into BHS, a private company, on these grounds. It pointed out that the watchdog had no powers of enforcement of the Companies Act, adding that this would be a job for government.

Walker's own letter, which was dated 6 June, noted that he appreciated the the FRC could not be responsible for answering every question surrounding the retailer's collapse, but added that it did have a crucial role to play.

Read more: Why pension promises are no longer fit for purpose

The FRC has previously written to Richard Fuller, responding to a similar request he made to launch an investigation into the events surrounding the collapse of BHS. In the letter dated 9 May, the FRC reassured the MP, who is a member of the Business, Innovation and Skills committee, that it was currently looking into whether it would launch an investigation, although the watchdog again stressed the limited remit it had to do so.

When BHS plunged into administration in April, it sparked two parliamentary inquiries. An inquiry from the Work and Pensions committee is examining the role of pensions regulation in the UK, while the inquiry from the Business, Innovation and Skills committee is focused on the £1 sale of BHS to Retail Acquisitions last year.

Read more: Seven numbers explaining the demise of BHS

Since the launch of the inquiries, a number of well-known legal and accountancy advisers have given evidence, although Frank Field, chair of the Work and Pensions committee, recently said that what he has heard so far had created more questions than it had answers.

Last week, BHS' administrators announced that the company would be wound up after it failed to secure a buyer.

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