Accounting Sheep?

| April 20, 2012 | 0 Comments

Spotted in Private Eye magazine by a keen eyed reader.

Among the more obvious lessons of the financial crisis was that accounting and auditing of financial institutions needed drastic improvement. A Lords enquiry last year concluded that the regulators needed a shake-up too.

The latter has now happened with a reorganisation of the Financial Reporting Council (FRC). But whether it will help avert the next crisis is far from certain, given the same old faces in charge.

Under FRC chairman Baroness (Sarah) Hogg, John Major’s former de-regulatory head of policy, a new standards committee has been created. It will be chaired by Richard Fleck, an old-stager at the FRC and its predecessor bodies since 1986. Fleck has also remained a partner and now a consultant to law firm Herbert Smith, which happens to act for the big accountancy firms when they get nailed by the regulators.

The chairman of the FRC’s auditing practices board meanwhile will be Nick Land, chairman of Ernst & Young when it screwed up the audit of Equitable Life, with disastrous consequences.

Under Hogg the FRC has already objected to European efforts to clamp down on auditors’ conflicts of interest. Hopes for beancounters alerting the world to the next banking crisis, as they signally failed to do last time, look slim indeed.

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Category: Timeout

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