The Financial Reporting Council round-up
Published 26 February 2015
We report today on insurance issues for accountants in relation to FRC investigations. We set out below some recent developments at the FRC which may be of interest.
- The FRC's Accountancy Scheme and Actuarial Scheme have been updated with effect from 8 December 2014. Among the new changes are those to allow joint tribunals where both actuaries and accountants are being investigated in respect of the same matters. Earlier in the year a change provided for the introduction of ex-judges to be considered as chairs for Tribunals in appropriate cases which should be welcomed by the profession; previously the qualification for Tribunal chairs was simply a qualified lawyer of suitable experience.
- Deloitte has successfully appealed against certain of the findings in the FRC's MG Rover investigation, which formed part of the findings on which a £14m fine was based. Eight of the 13 findings were overturned. The appeal tribunal found that Deloitte had not breached its public interest responsibilities and its fees were not excessive or unjustified. All findings of deliberate misconduct were quashed. The appeal tribunal was critical of the earlier findings, notably in respect of findings that were based on insufficient or no evidence. It provides a much needed clarification of the duties of accountants in dealing with transactions involving the public interest.
- In December 2014 the FRC published its report of its review of 13 UK entities (including banks, building societies, subsidiaries of international banks), which focused on the quality of aspects of the audit of loan loss provisions and related IT controls in banks and building societies. On a positive note, the FRC generally found improvement in the standards maintained by these entities, but it also noted that consistency needs to be addressed - naming in particular the issue of auditors not being challenging enough.