Plans for the Financial Reporting Review Panel (FRRP) to share more information with the Audit Inspection Unit (AIU) and to name companies that breach accounting rules could undermine trust in auditors, the accounting profession has warned.
Under recently published revised operating procedures the FRRP will swap notes with the Audit Inspection Unit (AIU) and may publicise “significant changes” or errors in companies’ accounts.
Following a consultation process by the Department for Business (BIS) the FRRP, which acts as an accounting watchdog within the Financial Reporting Council, will also reserve the right of to make a public announcement when it requires a company to make a significant change or restatement, “whether corrective or clarificatory”.
In general, respondents to the consultation supported the proposal to share information with the AIU, the FRRP said in its summary of the consultation responses.
But not all accounting firms were happy with the proposal. Deloitte said in its consultation response that the FRRP’s proposal to share information with the AIU risks “damaging the audit/ company relationship by creating unease on the information passing from the AIU to the FRP or vice versa”.