Discipline board mired in controversy
The Financial Reporting Council (FRC) and Accountancy and Actuarial Discipline Board (AADB) have found themselves at odds with the professions that they are responsible for regulating.
One of the issues is the vexed subject of awarding of costs in cases pursued by the AADB where the defendant is exonerated by the tribunal. An example of such a case is that of Mayflower, the failed small automotive engineering company whose directors included John Major. The AADB pursued auditors PricewaterhouseCoopers (PwC) and finance director David Donnelly. The tribunal exonerated PwC and Donnelly, and awarded costs of approximately £1m against the AADB.
In its consultation document published in January on a review of the accountancy scheme, the AADB proposes that it should not be possible for costs to be awarded against it unless the successful defendant can show misfeasance by the AADB, which is a very stringent test. The proposed change has drawn much private criticism from the accountancy and legal professions, which see it as changing the system of checks and balances appropriate to a disciplinary process.
On the other hand, an unnamed FRC spokesman said: ‘‘We can say there is now an unlevel playing field that pits us, with an £11m budget, against large accounting firms with hundreds of millions in revenues and insurance to boot.’’
Separately, the government has indicated that it wishes to move to a situation where the activities of the FRC and subsidiary bodies are funded wholly by the private sector. The government intends that it should not have to make any contribution after 2008/09.
