COMPANIES will be forced to admit when they have investigated by the FRC's conduct committee for failing to provide accurate information in accounts or reports, under proposals put forward by the reporting watchdog.
As part of amendments to the way it reviews company reports, the FRC plans to name and shame those companies that are asked to make changes to their accounts following an inquiry by its conduct arm.
Such requests are rare - the FRC's conduct arm reviews about 250 sets of company accounts a year, and, typically, writes to anything up to half that number of companies.
Currently, companies can choose whether they refer to any changes ordered by the FRC, as aerospace manufacturer Rolls-Royce did in February when it restated figures following an FRC review that resulted in a change to the way it accounts for entry fees.
Under the revised operating procedures, put out to public consultation earlier this week, company explanations for failing to adhere to the rules must be" fair and balanced", while the FRC will also need to be allowed to comment on company disclosures in light of engagement with its conduct committee.
"Our original practice was not to seek any further publicity in respect of committee references which are not mentioned in the current operating procedures. However, the steady rash of failures and disappointments emanating from within the business and financial community during the recent economic crisis raised a question concerning the trustworthiness of corporate activity," the consultation document said.
"We now operate in a regulatory environment where increased transparency is both expected and required in order to restore trust."
Other amendments comprise an explanation that the conduct committee's letter to a company may include references to aspects of reporting other than compliance with mandatory reporting requirements; for example, cutting clutter; recording that, where practicable, the conduct committee's opening letter to the company chairman is copied to the finance director and audit committee chairman; and providing more information about how the conduct committee manages complaints.
The consultation is open to 16 June 2014.
You may also like
AccountancyAgeInsight is a frequently updated resource centre for finance professionals, offering a free and easy-to-use digital library of briefings, white papers and other information resources.