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POB recommends strengthening of independent arbitration for accountancy disputes

POB PN 004
24 Feb 2005


The Professional Oversight Board (POB), an operating body of the Financial Reporting Council, today issues its report on aspects of the UK's six chartered accountancy bodies' procedures for dealing with complaints and member discipline.

It has found that the bodies were generally making effective progress in implementing the recommendations made in a previous report by the Review Board of the Accountancy Foundation.  However, POB believes it is necessary to reaffirm certain recommendations where it considers progress to be insufficient and it believes that the procedures available for dealing with service related complaints would be enhanced by an independent arbitration service.

POB Chairman, Sir John Bourn, said,
"While the bodies were generally making effective progress in implementing earlier recommendations, we are underpinning investor, market and public confidence in financial reporting by reaffirming certain recommendations where we consider progress to be insufficient and by introducing an independent arbitration service."

POB's main recommendations are that:
  • The accountancy bodies should establish and offer an independent arbitration scheme for the resolution of service-related complaints and disputes involving accountants from chartered bodies;
  • It is for the bodies to determine the detail of their alternative dispute resolution (ADR) schemes with regard to their member profiles and circumstances. POB believes that the arbitration scheme should have as wide a remit and range of available solutions as is possible;
  • Issues of misconduct should not be dealt with through arbitration or mediation but must continue to be dealt with by the bodies' disciplinary systems or by the Accountancy Investigation and Discipline Board in cases of public interest;
  • POB reaffirms the Review Board's recommendations regarding mandatory engagement letters, mandatory internal complaints procedures, procedures on closing complaints, open hearings, and powers to reduce or waive fees, and reimburse costs following misconduct findings

POB looks forward to receiving the chartered accountancy bodies' proposals for meeting these recommendations by August 2005 and to working with the bodies to ensure effective implementation. POB would welcome comments from any other interested parties on the conclusions and recommendations of this report.

Notes to Editors
  1. The Financial Reporting Council (FRC) is a unified, independent regulator.  Its mission is to promote confidence in corporate reporting and governance.  The FRC incorporates five operating bodies: the Accounting Standards Board, the Auditing Practices Board, the Financial Reporting Review Panel, the Accountancy Discipline and Investigation Board and the Professional Oversight Board.
  2. The Professional Oversight Board for Accountancy contributes to the achievement of the Financial Reporting Council's own fundamental aim of promoting confidence in corporate reporting and governance.  It has three main responsibilities:
    • a statutory obligation to oversee the regulation of auditors  by the recognised accountancy bodies,  expected to take effect formally from 6 April 2005;
    • the monitoring of the quality of the auditing function in relation to economically significant entities;
    • the independent oversight of the regulation of the accountancy profession by the professional accountancy bodies.
  3. The Chairman of POB is Sir John Bourn.  He is the Comptroller and Auditor General and Auditor General for Wales.
  4. The POB Board is independent of the accountancy profession and the accountancy firms.  Its members have wide experience of business and the professions, the public sector, accountancy and auditing.
  5. The UK's six chartered accountancy bodies comprise the Association of Chartered Certified Accountants, the Chartered Institute of Management Accountants, The Chartered Institute of Public Finance and Accountancy, the Institute of Chartered Accountants in England and Wales, The Institute of Chartered Accountants in Ireland and the Institute of Chartered Accountants of Scotland.
  6. The Accountancy Foundation was set up by the UK's six chartered accountancy bodies listed above to exercise independent regulation of the accountancy profession. The Review Board of the Accountancy Foundation had similar aims to those of POB in overseeing the accountancy profession.
  7. If you would like a hard copy or have comments regarding the report please contact Jon Hooper, POB Project Manager, j.hooper@frc-pob.org.uk. The report is available on the website at   Publications.
  8. For further information contact Paul George, Director of POBA, telephone 020 7492 2340.
Document created under a former FRC operating body.


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