Regulations and Law

FRC Enforcement Video

The FRC is working hard to improve its transparency. Some would say they are not working hard enough and need a much more fundamental review. Recently there has been a marked increase in the number and level of fines they have levied on audit firms and audit partners, which we regard as positive On 12 July 2018, the FRC issued a News Alert about FRC executive Claudia Mortimore discussing the FRC’s enforcement process. In the video clip, Claudia Mortimore discusses how the team approaches ...

Watch out FRC – there’s a new Guv’nor in town

One of our members - Tony Johnson - who is a Chartered Secretary and longstanding member of ICSA, has brought to my attention ICSA’s planned rebranding to become “The Chartered Governance Institute”. See here for more details - https://www.icsa.org.uk/. ICSA or, should I say, CGI, appear to be positioning themselves as the “go-to” organisation for good corporate governance. Here’s what their President, David Vernon, had to say recently in his letter to members: “Over the last two years, your Council has been implementing ...

The Quindell Story and the FRC

5 years on and the FRC has fined KPMG for its performance over Quindell. It has taken far too long. The settlement received a huge amount of coverage in the press, e.g. https://www.ft.com/content/e8ce1a30-6d3d-11e8-852d-d8b934ff5ffa The FRC's official announcement can be found here: https://www.frc.org.uk/news/june-2018/sanctions-in-relation-to-the-audit-of-quindell-plc The KPMG fine of £3.15 million is derisory. It is absurd when compared with the (£2bn) shareholder losses as a result of being misled by the accounts. The average KPMG partner was paid £519k in 2018, and many were paid more. To ...

BEIS Consultation on Insolvency and Corporate Governance

We have submitted jointly with the UK Shareholders Association our response to the consultation on Insolvency and Corporate Governance. The response was written by  Cliff Weight - Director, UK Individual Shareholders Society (ShareSoc) and Peter Parry - Policy Director, UK Shareholders' Association. Click here to read it.

Belated Action by FRC Re Autonomy

I commented previously on the conviction of former Autonomy CFO Sushovan Hussain for fraud in relation to the accounts of Autonomy Plc (see https://www.sharesoc.org/blog/regulations-and-law/they-do-things-differently-in-the-usa/ ). Just to show that this was not solely a case prompted by Hewlett Packard over their disastrous acquisition of the company, supported by a partisan California court as some have alleged, the Financial Reporting Council (FRC) have now announced formal complaints over the conduct of auditors Deloittes and senior finance staff of Autonomy – including Mr ...

FRC review and the future of audit: break up or shape up?

Sir John Kingman has been appointed to undertake a thorough review of the FRC. ShareSoc and UKSA will be making a submission to this. The FT on 16 May had a front page article on this headed Carillion’s demise spurs call for action against Big Four. MPs’ report on collapse asks for possible break-up of ‘cosy’ auditors by Gill Plimmer. The key points were Outsourcer’s fate exposed 'systemic flaws' in corporate Britain and its ‘toothless’ and 'feeble' regulators, say Commons committees Damning ...

They Do Things Differently in the USA

Former Autonomy CFO Sushovan Hussain has been found guilty of 16 counts of fraud in a Federal Court in California. He was convicted on all 16 counts of wire and securities fraud. This case was based on allegations of false accounting to ramp up the value of the Autonomy business prior to its acquisition by Hewlett-Packard. The latter subsequently wrote down most of the $10.3 billion cost of that acquisition. More background on this case is given in a previous blog post ...

Beaufort Administration, Intercede and the Mello Conference

Yesterday I attended the first day of the 2-day Mello investor conference in Derby. There were lots of good presentations and some interesting companies to talk to. One hot topic of conversation was the collapse of Beaufort which was forced into administration (see two previous blog posts on the topic for details). There are apparently many people affected by it. There are a number of major issues that have arisen here: The administrators (PWC) have suggested it might cost as much as ...

Lack of Transparency at the FRC

The Financial Times ran an interesting article on Friday (13/4/2018) headlined “FRC criticised over transparency". It reported that the Financial Reporting Council answered only 6 out of 52 Freedom of Information requests since 2013. Atul Shah, Professor of Accounting at the University of Suffolk, was reported as saying: “This shows that there is a real problem within the soul of the FRC. It is a public regulator and not a private members’ club, and it has clear duties of transparency, accountability ...

Integrity and independence in the judiciary and the financial services industry: a comparative study

My thanks go to ShareSoc member Tony Johnson - for bringing to my attention, a recent lecture given to the Banking Standards Board by Sir Geoffrey  Vos, Chancellor of the High Court of England and Wales. In the lecture, Sir Geoffrey considers the present state of integrity of our financial institutions and our judiciary.  For those with plenty of time, you can read the full script of his lecture here -  https://www.judiciary.gov.uk/wp-content/uploads/2018/03/chc-speech-banking-standards-board-lecture.pdf For those with less time, I summarise below :   Sir Geoffrey is well-qualified ...
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