Disciplinary cases are like a battle between David and Goliath for the Financial Reporting Council, the lawyer for the Accountancy and Actuarial Discipline Board claimed.

Executive counsel Cameron Scott defends the FRC’s position on paying costs to defendants ­ against whom AADB charges have been unsuccessful ­ only if misfeasance could be proved, in this week’s Accountancy Age .

The firms view the changes as erecting an almost insurmountable barrier to claiming back their legal costs, as it would amount to claimants needing to prove a deliberate and dishonest use of powers by the office of the AADB.

The FRC has argued that it should not fear ‘ruinous costs’ in bringing cases which need to be publicly heard.

‘These cases need to be dealt with. They will often pit us against large firms and professional indemnity insurers which have almost unlimited resources to fight any disciplinary case.

‘It is a “David against Goliath” situation and it is not in the public interest for us to be deterred from pursuing cases by the risk of a ruinous cost,’ Scott writes.

Although the FRC’s own regulatory strategy document, published last November, suggests case costs are met by the individual participating bodies to which the members or firms involved belong, this is not the case with cost awards against the FRC.

A spokesman clarified that the FRC would raise funds from its stakeholders at large to pay for a cost award made against it.

If the AADB’s charges are successful, however, the defendant could end up footing the bill ­ if the tribunal chooses ­ of the entire running costs of the case, together with the legal costs to the FRC.

The FRC is also proposing to change its rules to allow the disciplinary board to reprimand professionals for breaches of ‘guidance’ as well as breaching standards, a move that some say is tantamount to introducing rules-based accounting.

Until now, only a standards breach would have been punishable.