| LONDON, March 27
LONDON, March 27 Britain is speeding up plans to
streamline its cumbersome auditing and corporate governance
watchdog, giving it a bigger stick to rein in rulebreakers and
help shape European Union laws.
The shake-up at the Financial Reporting Council (FRC) comes
at a time when the audit market is on the back foot over its
role in the financial crisis.
The FRC is a sprawling umbrella group covering a range of
supervisory activities from punishing auditors for rule breaches
and checking up on accountants and actuaries to promoting best
practice in how companies run themselves.
Its wide remit has often made it hard for the public to
understand what it does.
"By tightening its focus and streamlining its governance and
structure, we believe the FRC can be even more effective," UK
business minister Norman Lamb said in a statement on Tuesday.
Laws come into force on July 2 to give the FRC's board more
powers, in particular to order bigger fines for poor quality
It was slammed for levying a 1.4 million pound ($2.2
million) fine on auditor PricewaterhouseCoopers (PWC)
earlier this year. Although it was a record penalty from the
watchdog, the sum is tiny compared with the auditor's turnover.
The FRC said it will begin a public consultation shortly on
levying bigger fines.
The accounting and auditing industry has given mixed reviews
to the reforms at the FRC.
"We recognise the need to streamline the operations of the
FRC and believe that these reforms will make the body a more
effective regulator," PwC, one of the world's "Big Four"
auditing firms, said.
The ICAEW accounting body in Britain said the challenge will
be to show that the revamped FRC can still champion high
standards in an increasingly international arena.
"This will be especially important at a time when there are
substantive reforms being considered in Brussels and other
markets around the world," the ICAEW said in a statement.
The revamped watchdog would be able to conclude disciplinary
hearings against audit firms without a public hearing as it
seeks to speed up cases, some of which have gone on for years.
The FRC will regroup around two core activities: a codes
committee, to be chaired by Jim Sutcliffe, and a conduct
committee headed by Richard Fleck.
Both cover all the FRC's existing work areas with, for
example, the conduct committee responsible for enforcement of
corporate governance codes, accounting standards, auditing
practices and actuarial standards.
"The reforms will simplify the FRC's over-complicated
structure and enable it to mobilise all the expertise in its
operating bodies to strengthen the UK voice in international
debates on corporate governance and reporting," FRC Chairwoman
Baroness Hogg said.