FRC audit plan under fire

Subsidiaries of major banks may escape auditing under new proposals by the UK regulator, which some believe may signal a return to the `light touch' regulation which precipitated the world wide financial crisis, The Observer reported.

The Financial Reporting Council is attempting to address growing concerns about the complexity of corporate reporting, releasing reforms which could lead to wholly owned subsidiaries of major banks not being audited, the newspaper added.

It's feared the reforms would reduce transparency with one senior city figure telling The Observer that, 'we are potentially not getting access to important information'.

Forensic accountant, Richard Murphy, said the actions of a subsidiary had in the past brought down the parent company.

`If this goes through, it will mean complex financial transactions will become harder to detect, so tax avoidance will increase,` Murphy said.

An FRC spokesman told The Observer that proposals where aimed at making company accounts simpler and would require government legislation to come into effect.

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'Light-touch' reforms raise fears of new bank disaster