Financial watchdog to turn detective
Companies could soon find themselves the target of the financial reporting watchdog if research reveals more accounting irregularities than are currently reported.
If a private study into unreported accounting anomalies confirms many more companies ‘are getting away with it’, the Financial Reporting Review Panel’s ‘shoe-string operation’ could become an investigative agency aimed at exposing companies that ‘fiddle’ their accounts.
An announcement is expected in May, but Sir Richard Sykes, the panel’s chairman, said proposals to extend existing powers would undergo ‘serious consideration’.
Sir Richard expressed concern over the sluggish process of inquiries in the Financial Reporting Council’s 2000 annual review. But, the panel has little power to speed up the process.
He told Accountancy Age: ‘We are at the mercy of companies to whom we write. It is relatively easy to delay the procedure.’
Delays are compounded through unanswered letters from the panel and slow internal investigation processes.
So far, if a company chooses not to co-operate, the panel has not shied away from using its only power – to refer a matter to court.
The panel currently investigates companies reactively through the receipt of anonymous letters, company reporting publications and media reports.
The proposed changes would see it go on a proactive footing.
The Panel was set up in June 1991 as the enforcement body for the Accounting Standards Board.
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