Currently, the work of examining accounts is done by the Financial Reporting Review Panel, but only on a reactive basis.
The DTI is understood to want to make the FRRP more pro-active but the FSA’s lobbying to take on the role would see the biggest restructuring of financial regulation since the regulator came into being.
Either way companies can look forward to more spot checks. Indeed the FRRP is understood to be poised to move to a risk-based approach to its work based upon the current FSA model, one that has been widely praised.
The FSA believes it has a role in risk assessment and investigation. It has also hinted that such a reform would solve the funding issues for the FRRP which currently only draws a small amount of money from firms, the accountancy institute and government.
The FSA is well placed to get its views heard. Ken Rushton, director of listings at the regulator and Michael Foot, a managing director, are both on the government’s coordinating group reviewing UK auditing and accounting in the wake of Enron and WorldCom.
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