Safety in Numbers: The Volume, Complexity and Strictness of Accounting Standards Have Grown Significantly over the Past Few Years as the Regulators Strive to Prevent Another Enron. Accountants Have Never before Been under Such Close Scrutiny, Writes Jake Claret, Who Explains How CIMA Members Can Protect Themselves Should the Finger of Blame Ever Point Their Way
Claret, Jake, Financial Management (UK)
Business is getting ever more risky. The commercial environment is full of pressures affecting finance professionals. New legislation is placing extra responsibilities on us all, and the regulatory framework is getting stronger. A "complaints culture" is being encouraged and disciplinary processes are becoming more formal.
The risks faced by CIMA members are not only increasing in the UK; we must now comply with international accounting, auditing, ethical, educational and disciplinary rules. Standards are getting tougher around the world, with new arrangements in the EU, the US, Australia, South Africa and many other countries. The changes have been designed to create confidence in capital markets and greater trust in finance professionals. New anti-terrorist and money-laundering laws have joined company, health and safety, employment and other regulations that are placing more responsibility on institute members in both practice and business.
The Accountancy Foundation is giving way to an enhanced Financial Reporting Council that includes the Financial Reporting Review Panel. This panel used to consider financial reports when its attention was drawn to apparent non-compliance with reporting standards, but it will now proactively review listed company accounts to see whether they conform to standard--and initiate action if they don't. This may entail an inquiry by the Accountancy Investigation and Discipline Board, which could decide whether or not there is a ease for a finance director to answer before its disciplinary tribunal. Alternatively, a complaint may be made against a member through an accountancy body's disciplinary procedures.
CIMA receives relatively few complaints about its members' conduct, but the number has been rising. The review board (part of the Accountancy Foundation) studied all the CCAB bodies' complaints and disciplinary procedures and has recommended that all of them should do more to publicise bow and where complaints might be made.
Professional bodies' disciplinary procedures have changed radically over the past few years. The Human Rights Act 1998 in particular has driven them to make the processes more like formal court hearings, where eases are presented by lawyers and witnesses are called to testify. This is to ensure the rights of the respondent, who is entitled to legal representation and may also cross-examine witnesses for the complainant. Cases now take longer to prepare and the hearings are longer and more costly for both parties. Unsuccessful respondents may have to pay not only their own costs and penalties (or receive some other sanction), but also costs that might be awarded against them. Even if cleared, a respondent may still incur considerable legal …
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Publication information: Article title: Safety in Numbers: The Volume, Complexity and Strictness of Accounting Standards Have Grown Significantly over the Past Few Years as the Regulators Strive to Prevent Another Enron. Accountants Have Never before Been under Such Close Scrutiny, Writes Jake Claret, Who Explains How CIMA Members Can Protect Themselves Should the Finger of Blame Ever Point Their Way. Contributors: Claret, Jake - Author. Magazine title: Financial Management (UK). Publication date: November 2003. Page number: 32. © 2009 Chartered Institute of Management Accountants (CIMA). COPYRIGHT 2003 Gale Group.