Time for a seperate independent regulator?
As the dust settles on the events of recent months, the talk in some quarters of Whitehall and the City is that now might be the time for a separate independent regulator for auditors.
The Accountancy Foundation may only be, in effect, less than a year old but an examination of the fledgling regulator has been on the cards since the summer.
Of course the Foundation should not be immune to review. But nothing had been expected for another three years. Nevertheless, given the severity of this year’s corporate failures – and since other aspects of the industry are under scrutiny – that timetable was always going to be brought forward.
The Foundation is a creation of a time when had Jeffrey Archer used Enron, Andersen and WorldCom as a plot device, he would have been accused of being too far-fetched.
Now, given business processes elsewhere are undergoing such radical change, it is only fitting and right that the Foundation comes in for scrutiny too.
There is no resistance to this review from the profession. So far, at least. Indeed CIMA, one of the six accountancy bodies that the Foundation oversees, is due to debate whether it should remain under its aegis.
The debate centres around two issues – structure and funding. While many criticise the Foundation for its unwieldiness, others are more concerned about its independence.
If CIMA withdraws, CIPFA, the public sector body, whose members also do not carry out audits, could pull out too.
If that happened the Foundation would suddenly oversee only four of the six UK institutes. If that were the case, the whole structure, unwieldy or otherwise, could collapse.
So if funding is the issue that could prompt this doomsday scenario, now may be the time for the government to step in and fund the oversight of an industry which it – somewhat belatedly – is realising is of the utmost importance to the smooth, lawful running of business.
- Michelle Perry, features editor of Accountancy Age.