ICAEW must ‘act quickly’ over public interest guidance failings
FRC says it will work with ICAEW to resolve 'fundamental' question around how accountants should act in the public interest
CONFUSION among accountants as to how to take account of the public interest when accepting or conducting work is a “fundamental” issue that must be addressed quickly by the ICAEW, the profession’s watchdog said yesterday.
Speaking at the Financial Reporting Council’s (FRC) annual open meeting, chief executive Stephen Haddrill [pictured] said the watchdog was “very keen” that the ICAEW quickly address the lack of clarity in its guidance about how accountants should act in the public interest.
His comments came after Deloitte was able to overturn a number of charges levied against it by the FRC over its work at MG Rover, the carmaker that collapsed in 2005. An appeal tribunal dismissed the charge that Deloitte acted against the public interest and went on to criticise the ICAEW’s guidance on how to consider the public interest as “vague and unhelpful”.
Improving the guidance on how the public interest should bear on the decision of an accountant to accept an assignment is a “fundamental issue that must not remain up in the air too long”, Haddrill said.
Haddrill added that the FRC is keen to work with ICAEW and other institutes to find a solution because of the risk of creating a “vacuum in something so fundamentally important”.
ICAEW chief executive Michael Izza had earlier said the tribunal ruling “suggests there needs to be greater clarity for the accountancy profession with regard to its public interest responsibilities“. and that the institute needs to work “through the detail of the tribunal’s ruling before coming to any firm conclusions.”
Last year, the FRC said that it would need more funding from preparers of accounts and professional bodies to manage increases in its audit and disciplinary workload.
According to Haddrill, staffing numbers and the FRC’s budget had been put under pressure, but it would look to conduct more disciplinary cases in-house in favour of using “expensive advisers”.
Haddrill said the FRC has a “really strong” team of lawyers, and uses reports written by industry experts to support its cases, but that it is “a fact of life” that the FRC regularly faces “a pretty long rank” of lawyers when fighting the cases.
FRC chairman Sir Win Bischoff also reiterated that the watchdog needed to better represent the profession on its board. In October, the FRC was criticised for the lack of SME representation on its board and for being “composed entirely of people that have listed company background or are retired civil servants”.
Bischoff said the FRC was “working on it”, and that he hoped to provide more information on its efforts at next year’s meeting. He also said the FRC should not be “quite so south-east focused”.