'Trigger-happy' research funds from ICAEW

The English ICA is funding research into the controversial question of ‘trigger-happy’ accountants forcing troubled companies into receivership.

Researchers at Lancaster University have begun preparing a report which will focus on the issue of whether an accountancy firm appointed to investigate a company’s financial affairs should subsequently be allowed to act as its receiver.

The research comes as the profession defends itself against allegations last week that the prospect of earning lucrative receivership fees is influencing recommendations made by firms investigating companies on behalf of banks.

The institute is expected to decide next week whether there are grounds for disciplinary proceedings against Grant Thornton over its involvement with collapsed housewares distributor Heritage plc. The firm was appointed by Lloyds Bank to investigate the company and was subsequently appointed as its receiver.

Researcher Alan Katz, a former Arthur Andersen partner, said the project’s aim was to see whether there was statistical evidence of improved company survival when different firms were used as investigator and receiver.

He said it was too early to come to any conclusions, but the project would be completed by the summer. The institute’s research council approved funding for the project last November.