PQ magazine www.pqmagazine.com / www.pqjobs.co.uk
January 2019
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‘WATCHDOG IS LIVING ON BORROWED TIME’ The Financial Reporting Council (FRC) has outlived its usefulness and needs to be scrapped, according to Professor Prem Sikka. Sikka, a star turn at our recent joint conference at London South Bank University, said the regulator had become “a cheerleader for the profession”, and in a post-Carillion world was totally compromised. In his view it can’t be rescued as there are too many fault lines. Sikka felt that the FRC is still dominated by big corporations and auditing firms and is, worringly, funded by the same people. Where, he asked, was its independence, a pre-requisite for good corporate governance? The watchdog also takes too long to complete its investigations. “It takes years and years to get anything done,” he said. He felt some investigations were merely started to appease public opinion and are then simply abandoned. Sikka pointed to the fact that he is not alone in his condemnation, either. The FRC has been
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FRC has become a cheerleader for the profession Professor Sikka
described as “fatally flawed” and “toothless” by others. He said the FRC has never been able to make up its mind about whether it was a public or private
body. And Sikka emphasised that it was not open to effective scrutiny. When he asked how many complaints it had received about audits, and how many had been
rejected, the FRC did not respond. It was only after these questions were raised in the House of Commons that he got some of this information. He also castigated accountancy educators who were “churning out obedient robots” not ready to question how the watchdog works or how audits are undertaken. He stressed that if people want to see a change to auditing in the UK then the FRC has to go in its current form. Sikka is, of course, leading a major review of the accountancy profession for the shadow government, and his proposals for an alternative should be published very soon. Leading commentator on the accountancy industry Robert Bruce felt the FRC has been dealt a poor hand. While the Financial Conduct Authority (FCA) has 300 enforcement staff the FRC has just 30. It is under-resourced and has no statutory powers. Bruce, on the same platform as Sikka, pointed to the fact that Continued on page 6
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