LONDON, May 20 (Reuters) - The chair of Britain’s Financial Reporting Council, Simon Dingemans, will step down after just eight months, casting further doubt over proposed sweeping reforms of auditing and the watchdog itself.
The former Goldman Sachs banker took up the post last October as part of a clean sweep of top council officials after corporate failures raised questions about enforcement of auditing standards.
The FRC said it had been agreed when Dingemans joined that he could take on additional roles that did not conflict with his job at the watchdog.
“This has not proved possible,” the FRC said in a statement, adding that Dingemans expects to return to a more full-time role in the private sector.
The business ministry will appoint a replacement.
Corporate failures at building firm Carillion and retailer BHS prompted reviews of the FRC and auditing.
A government-commissioned report recommended replacing the FRC with a more powerful regulator. Britain’s competition authority recommended fundamental reform to loosen the grip of the Big Four accounting firms EY, PwC, KPMG and Deloitte on the audit market.
But the changes require legislation and the government has been sidetracked by Brexit and now COVID-19.
Michael Izza, chief executive of the ICAEW, a professional accounting body, was surprised and disappointed by Dingemans’ departure, saying it marks a “bit of a setback” to the reform process, which was already proceeding very slowly due to the pandemic.
“None of these things are a priority for the government at the moment and the world when we come out of this is going to look a lot different and there is going to be a different view of these reforms,” Izza said.
“We do need a strong and respected FRC,” Izza said.
Prem Sikka, professor of accounting at Sheffield University, said Dingemans wanted the break-up of the Big Four but the business ministry is thought not to favour this.
Reporting by Huw Jones; Editing by Giles Elgood