Plans by the FRC to remove professional body consultation at the onset of an investigation could open up risks of unaccountability, warns ICAEW
THE ICAEW has warned that the Financial Reporting Council’s proposed changes to its disciplinary processes could lead to a lack of accountability.
The FRC has previously come under fire for the time it takes disciplinary procedures to take place, including one case which took ten years from the start of the investigation to the day the tribunal dished out a reprimand.
In a bid to counteract delays, the FRC proposed reforms which include removing the need to obtain agreement from a professional body at the outset of an investigation. The FRC claims the changes will allow it to investigate and sanction accountants quicker and increase its independence. It also reduced its seven operating arms to two, including a Conduct Committee which will handle disciplinary procedures.
However, the ICAEW, one of the largest professional bodies by member numbers, has suggested this change could result in conduct matters being determined without effective accountability.
Vernon Soare (pictured), ICAEW executive director, said: “It is important that the professional bodies continue to play a role in the preliminary investigation of complaints which may lead to cases being taken by the FRC, as this can both add value to the process and lead to a more informed decision.
“Without a formal requirement for the FRC’s new Conduct Committee to obtain consent on changes to the Accountancy Disciplinary Scheme or consult with the professional bodies concerning preliminary investigations, there is a danger that decisions on disciplinary matters will be taken by the FRC in isolation.”
The institute says more evidence is needed to justify the change, suggesting there are no examples of delays caused by consulting with a professional body.
Soare said: “Professional conduct and disciplinary matters are a key part of ICAEW’s work to uphold the standards of the profession … we are committed to continue collaborating with the FRC on the effective investigation and resolution of such cases.”
The reduction of operating arms from seven to two took place in July this year.