Sir Win Bischoff named FRC Chairman
In an unexpected appointment Sir Win Bischoff has been named as the new Chairman of the Financial Reporting Council (FRC). Following in the footsteps of the present incumbent, Baroness Hogg, Bischoff faces some real challenges when he takes up the appointment at the beginning of May.
There are several areas needing scrutiny and review. First up is whether the FRC can continue to represent ‘UK interests in international standard-setting,’ having abjectly failed to stop the slide away from the true and fair view of accounts represented by International Financial Reporting Standards.
Here he will have to tackle huge conflicts of interest inside the FRC and reinforced by negligence from the Department of Business, Innovation & Skills (BIS).
The domination of FRC thinking and opinion by the Big 4 audit firms in the face of mounting evidence that they failed our major banks in the run up to the global financial crisis, must also provide food for thought for the new Chairman. The power of the Big 4 must be reigned in and downgraded through introducing more independent voices into the FRC’s governing bodies.
The way in which the current FRC consultation on incorporating the Sharman Inquiry findings has undermined and discredited Sharman’s main recommendations is a further cause for concern that chairman Bischoff must tackle. Share owners will be looking to him to resist the FRC proceeding with a split to the elements relevant to a proper consideration of ‘going concern’ and to in effect limit consideration to just the preparation of the financial statements as defined in accounting standards.
A third outstanding problem will be to resolve the dispute between the Bompas Opinion and the second Martin Moore view (as currently defended by the FRC). Here new Chairman Bischoff may have to seek judicial review of how to unwind the cat’s cradle of fact and counter fact that FRC’s blind leadership of failed accounting standards has led to. The Minister Jo Swinson’s statement last autumn on the lack of concern about the implications of Bompas, continues to undermine her credibility in the face of growing sympathy with Bompas amongst asset owners, asset managers and the Bank of England, not to mention a few of our major listed companies.
This perhaps is the new man’s toughest challenge: he faces a formidable phalanx of FRC entrenchment, BIS culpability and Ministerial incompetence. We encourage him to take bold steps to clean the Aegean stables.