BusinessCorporate FinanceWhat’s the FRRP point?

What's the FRRP point?

The Financial Reporting Review Panel has just released its latest report on company accounting, delivering its usual blend of facts and figures about what it has done

The results are almost entirely meaningless. What are we to make of the fact
that 49 companies changed their accounting as a result of
FRRP investigations?
And that something over 200 companies were featured this year?

One of the great achievements the body announced last year was that it was
being ‘proactive’, and looking at companies randomly without being tipped off.
Any organisation that boasts about being proactive, you might think, can’t be
the most dynamic on earth.

No doubt issuing these reports provides stimulating work (and a good wage)
for the panel but you have to ask what it’s doing for the rest of us. The FRRP
takes the view, in common with the rest of the Financial Reporting Council, that
working behind the scenes is best.

FRRP chairman Bill Knight said this week: ‘The panel believes that the best
regulation is by agreement. The panel relies on the willingness of directors to
discuss their accounts with us openly, so we can understand the basis for their
decisions.’

But what do we gain?

We don’t know which companies have had problems with their accounts, and what
kind of problems.

If there are issues of significance to be raised, they should be raised in
public. Investors have a right to know that the companies they own have problems
in the books.

If the issues are not all that significant, then why have the FRRP at all? If
all it is doing is ticking people off for not dotting their ‘i’s and crossing
their ‘t’s, then the world can get along fine without it.

Alex Hawkes is news editor of Accountancy Age

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