The Financial Reporting Council (FRC)’s new chairman has promised faster implementation of the government-endorsed recommendations from last year’s ‘Independent Review of the Financial Reporting Council’. The review excoriated the current audit regime and recommended setting up the Audit, Reporting and Governance Authority (ARGA) .
Simon Dingemans and new chief executive, Sir Jon Thompson, promise speedier implementation of government’s paper, 'Audit regime in the UK to be transformed with new regulator'. The government promised to implement 48 of 83 recommendations made by Sir John Kingman, the chairman of Legal & General, in his critical ‘Independent Review of the Financial Reporting Council’.
- Sir John Kingman’s review came following a series of accounting scandals, primarily among the ‘Big Four’ practices.
- His most strident criticisms called the FRC a toothless regulator, slow to act, weak in purpose and supported by a board “that was largely self-perpetuating”.
The new and more powerful ARGA will have greater powers to monitor and discipline auditors and company directors.
- ARGA will have the power to investigate company directors. Currently they can only be investigated if they are registered with an accounting body.
- ARGA staff will be forbidden from working on regulatory projects that involve a previous employer.
- Should a company fail, it will be able to produce reports on corporate conduct and management.
- It will have the power to make direct changes to accounts rather than having to apply to a court to do so.
There are also calls for new rules forcing company directors to certify that accounts do not contain misrepresentations or untrue statements.
Simon Dingemans was formerly the chief financial officer at GlaxoSmithKline, while Sir Jon Thompson was former chief executive at HMRC.