FRC considers costs review
The FRC is considering changing the rules of the Accountancy Investigation and Discipline Board after its embarrassing defeat on the Mayflower case left it with a £1m costs bill, for which it has not formally accounted
Senior figures at the accounting watchdog hit out at the tribunal this week,
implying that the costs decision would see it restricting its activities.
The move is raising fears that high-profile investigations into MG Rover and
iSoft may never be brought and heard as a result.
AIDB executive counsel Cameron
Scott told Accountancy Age this week that aspects of the body’s rules
on costs were up for review. ‘We are considering revisiting the rules of the
scheme. If there are going to be any changes, we would have to go to the
professional bodies to discuss these with them because the changes would affect
their members. And we would also consult quite widely before any changes can be
made.’
Currently, if costs are awarded to the AIDB, they go back to the institutes
that paid for the investigation, whereas the body must itself pay costs if they
are awarded against it, which could be adjusted.
Immunity from costs rulings against it would also prevent the current
situation. Many other regulators are immune from negligence claims in a similar
way.
The FRC has still not ruled out a judicial review of the costs decision,
which would escalate the row with PwC. The firm was on the warpath in its
attempts to recover its costs, and is unlikely to take kindly to attempts to
drag out the matter.
The AIDB’s investigations into MG Rover started in August 2005, and are
likely to prove an expensive investigation. FRC figures estimate that, at worst,
costs orders against it could hit £5m for major probes. It has a budget of about
£15m.