Link: Watchdog set to bow out
In a dramatic – and what is believed to be unprecedented – move, Deloitte last week won the interim injunction, preventing the JDS from releasing the information that had been expected to be issued last Wednesday. Accountancy Age, published by VNU Business Publications Ltd, also had details of the announcement.
The announcement had been expected to reveal further information surrounding the JDS investigation of Deloitte, relating to its inquiry into the firm’s audit of casino operator Capital Corporation in the 1990s.
Accountancy Age and the JDS have both instructed barristers in an attempt to have the injunction lifted.
Accountancy Age editor Damian Wild said: ‘Accountancy Age has this week found itself at the centre of a media furore over an injunction obtained by Deloitte preventing publication by us, or by the JDS, of information about its ongoing investigation into its handling of information connected with the inquiry into Deloitte’s audit of casino group Capital Corporation.
‘We had expected to tell you about the information in our edition of last Thursday. However because of the injunction we know the details but we cannot tell you what they are.
‘We will bring you further details if and when we are able to do so.’
The JDS website describes Capital as a ‘current case’. It says: ‘The investigation covers Touche Ross and Deloitte & Touche, the former auditors of Capital Corporation plc, as well as chartered accountants formerly employed by Capital Corporation.’
In a statement released to Accountancy Age on Tuesday, the firm said it had ‘obtained a temporary injunction to uphold its rights under the Joint Disciplinary Scheme rules’.
However, the action has already prompted some commentators to question the accountancy profession’s self-regulation model.
The department of trade and industry refused to comment on this week’s developments and whether they would prompt Whitehall to look again at the way in which accountancy is regulated.
But a spokeswoman said that the government had recently strengthened the UK regulatory framework, which had led to increased powers for the Financial Reporting Council and the creation of the Accountancy Investigation and Discipline Board.
The DTI spokeswoman also said the department was set to publish a white paper on company law reform, following its decision to facilitate ‘negotiations between auditors, investors, business and regulators to discuss ways by which audit quality and transparency can be enhanced’.
WHAT THE PAPERS SAY…
Commentators fear that self-regulation will be seen as a ‘mockery’, making statutory intervention inevitable.
The Guardian, 11 February, ‘The move appears to be a significant breach of the spirit of established protocols under the accountancy profession’s voluntary Joint Disciplinary Scheme (JDS).’
Jeremy Warner, The Independent, 11 February, ‘Along with the law and medicine, accountancy remains one of the last bastions of self regulation in Britain. I hesitate to argue the case for bringing the profession into the fold of statutory regulation, but Deloitte & Touche’s action in issuing an injunction against the Joint Disciplinary Scheme (JDS) has driven the last nail into the coffin of this discredited system and makes eventual FSA regulation all but inevitable. The rest of the profession will not be thanking Deloitte’s for so vigorously defending its corner. There’s too little choice and too much power concentrated in the Big Four accounting practices. It’s time they were reined in and brought to book.’
Patience Wheatcroft, The Times, 10 February, ‘If self-regulation of any sector is to be taken seriously, it has to show that it is as tough as any outside policeman might be. The accountancy profession is at risk of its regulatory process being seen as a mockery.’
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