FRC audit plan under fire
City figures fear a return to light-touch regulation under new proposals to simplify financial reporting rules
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.
Read the full story:
‘Light-touch’
reforms raise fears of new bank disaster