The UK’s ICSA: The Governance Institute has found 57% of governance professionals are opposed to increased enforcement powers of the Financial Reporting Council (FRC), a survey has found.
The survey, which was conducted in collaboration with recruitment agency The Core Partnership, found that only 27% of respondents were in favour of more powers being granted to the FRC, while 16% stated that they were unsure.
The FRC has recently been described as ‘chronically passive’ in a report by a Select Committee investigating the collapse of Carillion which examined the role the company’s auditors had in its demise.
One respondent in support of the FRC’s current model said: “I believe the existing FRC’s enforcement powers are adequate and would not want to see increased pressure on businesses.”
However, one critic noted “Currently it [the FRC] is a little toothless and is seen as technical body rather than an enforcer on publicly listed companies.”
The survey found that 61% of respondents’ believe that the FRC is sufficiently independent from those which it regulates, with only 11% saying otherwise. One respondent commented: “Better balance and oversight from those who do not have Big Four connections would not hurt.”
In April, the UK government launched an independent review of the FRC which is to assess its governance, impact and powers, in order to ensure it is fit for purpose.
ICSA: The Governance Institute’s policy and research director Peter Swabey commented: “Concerns were also raised that, while a risk-based approach to large audits has its benefits, this birds-eye view approach can sometimes lead to less time and focus on the subsidiaries, and missed opportunities to spot lower-level systemic process issues.”