The Financial Reporting Council, in its current form, has been going for over
two years now, but some feel it has been slow in getting into the swing of its
Investors have grabbed the opportunity presented by the current discussions
on audit competition to fire a broadside at the watchdog over its continued ties
to the profession.
The prevalent feeling among shareholders and their representatives is that
the FRC is not yet fully in the mindset of a regulator. Their reasoning is that
it is hard for such a body to present itself as independent while its various
boards are so littered with Big Four alumni.
And while we are not quite in the realms of fully-blown conspiracy theory in
which the Big Four control the regulation of the profession, it does raise some
question marks over the position of the FRC.
As one investor points out: ‘Everyone has an agenda and you have to work out
how best to minimise the risks of this’.
The body made a conciliatory gesture last week by appointing two non-Big Four
members to the Auditing Practices Board, singled out by investors as the worst
offender in terms of Big Four dominance.
But this is unlikely to appease for long. The APB, even with this watering
down, is still largely made up of those with Big Four links, while investors
want more fundamental reform of the entire standard setting process, right from
IFAC at a global level down to locally.
Without this, the calls for the government to finally step in and provide
fully blown regulation will start to grow, a situation that neither side truly
wants if there is an alternative.
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