This week, the Chief Executive of the FRC, Stephen Haddrill, wrote to the Chair of the Treasury Select Committee to enlist her support for the regulator getting increased powers to hold accountants to account.
The FRC has come under fire for the way it has handled some recent cases, and it has now published a report that concedes it should have been faster and more proactive in managing the investigation into KPMG and HBOS.
In the accompanying letter, Mr Haddrill calls for new legislation - if necessary - to make it easier to bring cases against accountancy professionals, wherever they work. He says that the way the system operates at the moment – holding auditors to a higher standard of accountability than their fellow accountants in businesses – is not satisfactory.
I strongly agree.
However, I would go further. Responsibility for business conduct and performance is shared around the board table, and ICAEW has long held the view that accountability should be too.
Responding to the Government’s corporate governance proposals a year ago, and in separate representations I made to the Prime Minister at that time, we recommended that consideration be given to how existing legal mechanisms could be used to hold all company directors to account, not just those who happen to be current members of professional accountancy bodies.
This kind of extended oversight would represent a significant step towards improving the public’s trust in business. If we are serious about rebuilding that confidence, then scrutiny and sanction should apply to everyone who is in a public interest role, and not limited to those who hold certain memberships or qualifications.
I look forward to seeing how the Government responds.