WHAT IS GOING on at the Financial Reporting Council? Before the summer, we were told the regulator was to conduct a structural reshuffle, examining its form and function with the aim of emerging, butterfly-like and blinking, into a more streamlined and efficient dawn.
We’re still waiting. A spokesman said a consultation document written in conjunction with the Department for Business, Innovation and Skills is due any day now. With so many government hoops to jump through, it is little wonder the watchdog is kicking its heels waiting for the nod from on high.
But what will the consultation document look like, and where does the FRC see itself in the future?
The main board and its six sub-bodies have grown organically from the organisation’s inception in the early 1990s. For this reason, it seems logical to consider whether today’s animal is functioning as efficiently as possible.
Communication – or lack of it – between the various arms has been mooted as one possible reason for the overhaul, and overlapping responsibilities must also be a concern.
The regulator has vigorously denied claims that the restructure is financially motivated, saying any such cost pruning would have taken place soon after the credit crisis knocked London on its back.
If no or few jobs are to go, it seems unlikely that entire boards will be cast adrift, and consolidation of the various arms appears the most probable scenario. Whether staff will want to stay once they have been shuffled like so many cards is another question.
If the boards are jumbled around, it is inevitable that responsibilities will also shift. No longer will there be any need for six chairmen leading separate teams. How will the former chiefs feel about a real or perceived demotion?
With better communication in focus and sub-bodies being amalgamated, it seems likely the main FRC board will see its powers strengthened. This would also fit with its ambition for deeper engagement on the European regulatory front, as evidenced by the roundtables it hosted during the Conservative and Liberal Democrat party conferences.
Being sleeker and more streamlined might help it to lobby and command respect in Brussels, something a European official yesterday warned will be the UK’s greatest challenge in the future.
Some expert observers have suggested the Accounting Standards Board’s days are numbered. With UK listed companies following international financial reporting standards and much of the world heading the same way, it is true that the ASB has a smaller role to play than before.
However, many of its members have gone on to join global equivalent the IASB, and UK standard setters are well regarded in the international arena. Will this protect the body from being subsumed to a more active board?
It is impossible to know. And whatever expectations the FRC might have for the consultation, they could be trumped by stakeholder views or high-level political pressure. All eyes are on chief executive Stephen Haddrill, (pictured) possibly the only one who really knows where the cards will fall.
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