FRC

Meeting Investor Needs at the FRC, 3 December 2018

Once again the Financial Reporting Council (FRC) has kindly agreed to run an event specifically for UKSA and ShareSoc members. The agenda for the event is still being developed. However, it is likely to include: Regulatory responsibilities - the role of the FRC and the role of the FCA. What is the difference between the two? What are the objectives, responsibilities and remit of each one? The future of audit; what do the FRC's inspection results show? How well are standards ...

Firmer, faster, more transparent action needed by FRC, we tell Kingman

UKSA and ShareSoc responded jointly to Sir John Kingman’s review of the Financial Reporting Council (FRC). We summarised our assessment of the FRC’s current strengths and weaknesses and made suggestions for addressing the weaknesses. The main points we made were: Our main desired outcome is firmer and faster action against those who violate the integrity of reporting standards. It seems to us (and to the general public) that in practically every financial scandal or financial crisis, the FRC seems to have taken ...

Lax Regulation (Globo, GRG) and Japanese Trust AGM

Globo was one of those AIM companies that turned out to be a complete fraud. Back in December 2015 the Financial Reporting Council (FRC) announced an investigation into the audits of the company by Grant Thornton (GT). Even the cash reported on the balance sheet in the consolidated accounts of the parent company proved to be non-existent (or had been stolen perhaps). I have previously complained about the slow progress and the lack of any information on this investigation. But former shareholders ... Read more

UK Corporate Governance Code and new Companies (Miscellaneous Reporting) Regulations 2018

On July 16th, 2018 the FRC published its latest revision of the UK Corporate Governance Code, which is in my view shorter, simpler and better. The code can be read here: https://www.frc.org.uk/getattachment/88bd8c45-50ea-4841-95b0-d2f4f48069a2/2018-UK-Corporate-Governance-Code-FINAL.PDF A summary of the main changes is here https://www.frc.org.uk/getattachment/524d4f4b-62df-4c76-926a-66e223ca0893/Key-highlights-of-the-Code.pdf The FRC have also published a report on their consultation about the Code which explains the changes and the arguments for and against specific changes https://www.frc.org.uk/getattachment/90797f4b-37a1-463e-937f-5cfb14dbdcc4/2018-UK-Corporate-Governance-Code-Feedback-Statement-July-2018.pdf The changes to the Code complement the changes announced by Government in June 2018 to the Companies (Miscellaneous Reporting) ...

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 ...

Open Season on Auditors?

I attended a joint ShareSoc/UKSA meeting hosted by PwC yesterday. There was a lively debate as one might expect of the problems of the audit profession where there have been just too many issues with listed company accounts in recent years. The latest is an investigation announced by the FRC into the audit of Conviviality but there have been lots of other problem cases in both large and small companies – Carillion, Interserve, BHS, BT, Rolls-Royce, Mitie, RSM Tenon, Connaught, Autonomy, ...

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 ...

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 ...