Reporting watchdog lacks teeth.
New research has slammed the UK’s financial reporting watchdog for failing to pick up significant non-compliance by companies in their accounts.
A study by Portsmouth Business School on behalf of the ICAEW says the Financial Reporting Review Panel has fewer powers than overseas watchdogs such as the US Securities and Exchange Commission.
It recommends it be given new powers and take a more proactive approach to monitoring and enforcement. The report states: ‘If audit firms are not prepared to bring non-compliance to the attention of the panel themselves, then the alternative solution is for the panel to develop a programme of pro-active monitoring (of listed companies) itself.’
Its publication follows concerns expressed by panel chairman Sir Richard Sykes over the sluggish process of inquiries into company reporting violations, revealed in last week’s Accountancy Age.
A further suggestion to give the panel tribunal powers – referral to a court, which has still to be used – has not been supported because ‘this would further delay the outcomes of proceedings’.
Growing interest in the panel has emerged since changes to the current regulatory climate including establishment of the FSA and the push for one set of global accounting and audit standards.
For more on the debate about the panel, visit www.accountancyage.com/Practice/1117434.