March 22, 2018 / 10:58 AM / in 5 months

Britain to review if accounting watchdog needs more teeth

LONDON (Reuters) - Britain will review whether its accounting watchdog needs more powers after lawmakers voiced concerns about its effectiveness in tackling book-keeping scandals.

FILE PHOTO: Britain's Secretary of State for Business Greg Clark arrives in Downing Street, London, January 29, 2018. REUTERS/Toby Melville

“We intend to commission a review of the Financial Reporting Council’s operations and will announce further details in due course,” Britain’s business, energy and industrial strategy ministry said in a statement.

British business minister Greg Clark told a parliamentary committee on Wednesday there was a strong case for reviewing the operations of the FRC, a watchdog that also oversees actuaries and a voluntary code of conduct for companies.

“I think we should look at the operation of the FRC to see whether there are changes that are required. That should be done independently and I’m sure the committees will want to play a role in examining that,” Clark told lawmakers.

Following criticism by members of parliament, the FRC admitted last November it was too slow to investigate why accounting firm KPMG gave HBOS accounts the green light just seven months before the lender had to be rescued by a competitor during the global financial crisis.

“The UK is admired around the world for its corporate governance regime and it’s important to ensure all of our regulators continue to uphold those high standards,” the business ministry said.

The FRC said it welcomed a review of its work.

“The review provides an opportunity to consider changing public expectations and whether our powers are adequate to meet those,” the watchdog said in a statement.

The watchdog has already called for more powers, saying its remit only covers members of accounting professional bodies, such as on Monday when it began an investigation into the conduct of two former finance directors of bankrupt construction firm Carillion plc (CLLN.L).

The FRC currently cannot pursue a chief financial officer who is not a member of an accountancy professional body, a gap in its powers, requiring it to liaise with other regulators.

Reporting by Huw Jones; Editing by Adrian Croft

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