“The average SME finance director has no time to read proposals from the FRC, if they have indeed heard of the FRC,” admitted Roger Marshall, interim chairman of the Accounting Standards Board (ASB).
Marshall fielded a question on the subject of small company reporting from AccountingWEB at the Financial Reporting Council (FRC) annual open meeting held on Tuesday 20 March.
Baroness Hogg, who chairs the FRC, which regulates corporate governance and reporting and oversees the ASB, responded defensively to the question, by suggesting the FRC was under “attack” from questioners who felt that the council was not listening sufficiently to small company directors.
She felt that the FRC was being challenged “from the other end” with not listening to the profession.
“We don’t want to plunge in with regulation that is not appropriate,” she said, citing corporate governance as an example. “There are only certain areas where we get involved and, on the whole, we are trying to lighten legislation.”
Richard Fleck, chair of the Auditing Practices Board (APB), pointed out that the board was quite rightly challenged on small business issues some years ago. The APB set up a separate group of directors, practitioners and advisors which meets on a regular basis and has a representation on the APB main board. “It ensures that the SME dimension is always represented in any discussion,” he said.
Fleck said the APB had successfully argued that international standards should have a discrete and separate part that expressly addresses small company audits, to make it proportionate for SMEs. “We are quite sensitive to this issue on the auditing side,” he said. “We have promoted ideas for simplifying financial reporting to the smallest of the small companies, although there are European difficulties to take that to a conclusion.”