THE FINANCIAL REPORTING Council has begun an examination into its efficacy and future.
Roger Marshall, chairman of sub-body the Accounting Standards Board, said the process started in late 2010, when the regulator began considering whether it needs a different focus, and how to make the group work better.
“I think everyone has started thinking about what lessons can be learnt from the financial crisis and its aftermath,” he said.
The FRC is made up of six operating bodies, and communication between the groups is one of the primary focuses of the inquiry. The FRC board – which oversees the bodies – is to look into interactions between them, and whether these can be “maximised”.
Marshall revealed there is also appetite to strengthen the regulator’s powers, claiming the ability to investigate what goes wrong in the early stages of accounting failures – rather than waiting until after the event – will make the FRC a more subtle and effective operator.
The power to investigate non-accountants like company directors would also boost the FRC’s success when engaging on regulatory issues, Marshall argued. He is echoed by other stakeholders, who claim there is a ‘gap in the market’ when it comes to this kind of investigation.
The Financial Services Authority only looks into cases under its remit, and an inquiry by the Department for Business, Innovation and Skills can take years, by which time “the markets have already moved on”, said Marshall.
Some observers have suggested the process of strengthening the FRC could see it go in-house, moving away from its independent quango status and coming under direct government control. Marshall dismissed this proposal, saying the regulator’s internal structure is up for debate, but not its basic configuration.
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