MPs call for Companies House filing shake-up

house of commons

Accountants’ involvement in preparing accounts filed with Companies House
should be clearer and their responsibility for those accounts greater.

That was the recommendation of a report last month from the Business and
Enterprise Committee into the official companies register.

The committee, acting on a recommendation of the Professional Advisory Board,
advised that the details of any accountant a company has used to help prepare
their accounts should be published online for all firms. At present,
accountants’ names are uploaded only for firms that file paper accounts, but not
for the close to 50% of companies that file electronically.

Companies House accounts have caused headaches for accountants in the past.
In 2005, Accountancy Age revealed that fraudsters were stealing the names and
addresses of accountants in an attempt to legitimise the accounts of bogus
companies that were seeking to obtain huge volumes of credit.

However, Paul George, director of auditing at the Financial Reporting Council
and director of the Professional Oversight Board, welcomes the call from the
committee for greater transparency, but is concerned that the burden of
liability will be placed on accountants’ shoulders. The committee report says
‘accountants should take responsibility for the accuracy of the figures they
file’, but this is outside their remit, says George.

‘It is a matter of company law that it is the directors of a company who are
responsible for their financial statements,’ he says.

Vanessa Knapp, a principal consultant in the corporate division of law firm
Freshfields, agrees.

‘That doesn’t fit with the Companies Act at all,’ she says, adding that
accountants already have to meet various professional standards. ‘I’d have
thought that there is already enough regulation there.’

But Peter Mitchell, chairman of the Society of Professional Accountants, says
the profession should be held accountable. ‘We subscribe to the philosophy that
an accountant should stand behind the accounts that he is willing to prepare for
a limited company,’ he says.

Mitchell says that while ensuring accountants are named in Companies House
data will go some way to increasing transparency, a problem remains over the
lack of a register of professionals qualified to carry out accountancy work.
There is a register of qualified auditors but, although it has long been mooted,
no list exists for qualified accountants.

Mitchell says this is partly because of arguments over who can call
themselves an accountant. ‘At the moment the nature of those people who can call
themselves accountants will extend beyond the registered institutes to those who
are only part-qualified.’

There has been some suggestion that if a list was produced, Companies House
would then be able to cross-reference any accountant listed on a filing with the
register, cutting down on fraud and providing users with some verification the
accounts were properly prepared.

‘There is a big debate there which needs to be taken forward,’ says Mitchell.
‘We have got to find a solution to it – otherwise how does the public know who
they are dealing with.’

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