LONDON (Reuters) - Britain formally launched a review of its accounting regulator on Wednesday, saying it would consider potential new powers to help stop a repeat of corporate failures like Carillion.
John Kingman, a former top finance ministry official heading the review of the Financial Reporting Council (FRC) ordered by the business ministry, made a public call for evidence:
“The FRC’s work is critical to financial markets, the economy and public confidence. Trust, quality and credibility are the questions at the heart of today’s consultation.”
Parliament’s business committee said in a damning report last month that the FRC was “timid” in challenging outsourcing firm Carillion on the inadequate and questionable financial information it provided.
The FRC has long been criticized by lawmakers for being too slow in completing probes into accounting scandals. It filed formal complaints against auditors of software business Autonomy this month - five years after opening an investigation.
Kingman will look at whether legislation is needed to provide the watchdog with stronger powers after the FRC said it cannot pursue company officials who are not members of professional accounting bodies.
The review will consider whether the FRC is making the best use of existing powers to levy unlimited fines and ban accountants.
It will also touch on competition in the accounting sector where just four firms, KPMG, Deloitte, PwC and EY, check the books of nearly all listed blue chips.
And it will look at whether the FRC should have an added remit to ensure competition flourishes in the same way that the Financial Conduct Authority has.
The watchdog has welcomed the review, saying it will ensure it is best placed to support British efforts to attract investment in business for the long term.
Reporting by Huw Jones; Editing by Alexander Smith