A group of 11 business executives in the U.K. have been chosen to lead the inquiry into the nation’s accounting watchdog and assess whether the body is effective at identifying and preventing accounting issues.
Reports in the Financial Times said Friday (May 18) that Sir John Kingman, who once held former top positions in the Treasury before he became the chairman of Legal & General, chose the 11 business leaders to scrutinize the effectiveness of the Financial Reporting Council after criticism the watchdog is incompetent at its role and allowed a slew of accounting and auditing scandals to hit the U.K. market.
M&G chief executive Anne Richards, HM Treasury non-executive director and deputy chair of Kinnevik Amelia Fawcett, and former audit partner at PwC and former chair of the Accounting Standard Board Mary Keegan are all on the panel. Reports said no current executives from the so-called Big Four accountancy firms — PwC, Deloitte, EY and KPMG — are in the group.
Already, however, the panel itself is facing criticism, with some arguing that business executives are “too close to the establishment,” the publication stated, questioning whether the panel will made drastic changes to the watchdog that some argue are needed.
“This composition has not an ounce of radical reform in it,” said University of Suffolk professor of accounting Atul Shah in an interview with the publication. “Accounting regulation reviews need expert knowledge of its local and global history and failures, and the critical challenges of corporate accountability in an arena dominated by Big Four firms. We have no faith in this whitewash.”
Recent scandals have bred rising doubts over the Financial Reporting Council’s effectiveness, including the failure of U.K. lender HBOS and, more recently, the collapse of government construction contractor Carillion.
Last week MPs released a scathing report into the Carillion collapse, laying blame on the watchdog as too “timid,” “passive and reactive,” and “wholly ineffective” at addressing the company's issues that led to its insolvency.