View from the House – Austin Mitchell

The accountancy trade associations make much of their disciplinary arrangements when they chant their regular ‘public interest’ mantras.

These certainly frighten small practitioners because they can come down on them like a tonne of bricks – usually for quite trivial things. Yet they do nothing for the public or the victims of audit and insolvency malpractices.

Nor do they control the major firms whose activities have a far bigger impact on public interest and who have done far more to damage it by their failures. The professional bodies approach the big firms on bended knees.

Such disciplinary arrangements are farcical – simply an excuse to enable everyone except the ‘victims’ to make even more money. Having referred a number of complaints to various bodies over the years, I observe a sequence.

First, companies hire an accountant to prepare financial statements, who is paid handsomely.

Then come the auditors who claim a fee for saying there are no problems.

They don’t owe a ‘duty of care’ to any individual stakeholder, merely a duty to be paid.

When things go seriously wrong, the Department of Trade and Industry appoints inspectors, one of whom is usually a partner from a big accountancy firm who also collects huge fees. If the company is placed into receivership, the receiver too will be paid. Serious men demand serious money.

Anyone unhappy with the conduct of the audit or receivership has to find time and private money to lodge a complaint. Eventually, if it becomes the subject of a disciplinary hearing, the partners from major firms usually get off scot-free. The worst they face is a fine and a requirement to repay hearing costs. Is it any wonder that regulation has not worked and is rejected by the public?

This disciplinary farce is regularly played out because neither practitioners nor the accountancy bodies owe a ‘duty of care’ to anyone, least of all any complainant.

As licensing bodies, the accountancy bodies claim to be ‘public regulators’ but there is nothing public about all this and no accountability about its operation. It is time to end this farce and have an effective, independent regulator operating openly and owing a duty of care.

Austin Mitchell is Labour MP for Great Grimsby.

Related reading