FRC to gain new regulatory powers
Speculation is growing that a Commons statement, to be made by the DTI on Wednesday, will see the transferral of professional regulation from the Accountancy Foundation to the Financial Reporting Council.
Link: Audit report: watchdog faces early review
and Thumbs down for audit rotation.
Patricia Hewitt, trade & industry secretary, is expected to make this announcement following the DTI’s year-long review of UK audit regulation, set up after the accounting scandals in America.
The FRC, with its subsidiaries, the Accounting Standards Board and the Financial Reporting Review Panel, was set up to ‘promote and secure good financial reporting’.
The FRRP investigates companies that breach accounting rules, while the ASB makes, amends and withdraws accounting standards.
As the new independent regulator it will be asked to examine the relationship between auditors and their companies – in particular to look at any conflicts of interests in the services provided to clients, according to the FT.
As part of her statement, Hewitt is also expected to reject the mandatory rotation of auditors every five years, something which will please the profession.
A recent survey of rotation by Accountancy Age was almost unanimous in its rejection of such a measure.