The government is pushing ahead with its plans to streamline the auditing and governance watchdog, by giving it more powers to rein in rule breakers and help shape European Union laws.
Following a consultation, the government has given the go-ahead for the Financial Reporting Council (FRC) to reduce its operating arm from seven to two, and the shake up comes at a time when the audit markets has been deemed to be on its back foot over its role in the financial crisis.
FRC chairwoman Baroness Hogg saying: “The reforms will simplify the FRC’s over-complicated structure and enable it to mobilise all the expertise in its operating bodies to strengthen theUKvoice in international debates on corporate governance and reporting.”
As a result of the shake-up, the FRC are set to regroup around two core activities – a codes committee and a conduct committee – which will cover the FRC’s existing work.
Along with reducing from seven to two arms, the revamp will see the FRC conclude disciplinary hearings against audit firms without a public hearing as it seeks to speed up cases, some of which have gone on for years; and also have more powers to order bigger fines for poor quality audits.
The new laws as a result of the shake-up are set to come into force from July 2nd 2012.
Accountant Andrew Heskin specialises in taxation advice, tax planning and audits.