Reforms set to cut back chaotic audit regulator

Tim Wallace
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INCOHERENT growth of the Financial Reporting Council (FRC) has created an inefficient shambles, its chief executive told City A.M. yesterday.

“Following scandals like Enron and Equitable Life, the FRC’s responsibilities grew from accounting standards originally to cover areas like corporate governance, professional oversight, and actuarial work,” Stephen Heddrill told City A.M.

“However, the whole body was not reformed to take these into account.”

Today the FRC published a consultation paper on reforms to the scope of its disciplinary powers, the type of bodies covered, and to bolster its independence from those regulated.

In terms of structure, “there is a case for focusing on audits of major publicly listed firms,” Heddrill said. “We are willing to shrink away from monitoring charities and private companies, leaving them to regulators like the Charities Commission.”

On discipline, Heddrill wants new powers to speed up investigations: “We can make accountants give evidence, but not companies. That slows us down and means we often cannot find what we need. Powers to settle outside tribunals would also speed up the process and cut costs for everyone.”