But if - when the great and the good consider the situation some time hence - it is decided that self-regulation of the City has failed, it is not likely to be for want of trying on the part of the Financial Reporting Review Panel.
The accountancy watchdog set up by Sir Ron Dearing, chairman of the Financial Reporting Council and one of the powers behind the appointing of the Cadbury committee in May 1991, has certainly been baring its teeth of late. By being prepared to publicly rap the knuckles of the likes of Trafalgar House and British Gas, it has demonstrated that it is not afraid of taking on big names and forcing them to make significant changes to their figures.
There has been concern - most clearly exhibited in the Auditing Practices Board's report on the future direction of auditing issued last month - that the simultaneous establishment of the Accounting Standards Board, under the chairmanship of David Tweedie, and the APB on top of the regulatory role of the Institute of Chartered Accountants has created confusion. But the overall impression is of a body that is producing results without resorting to the law. And many auditors are coming to feel that the panel is a much-needed ally when directors apply pressure to adopt more favourable accounting treatments.
Although some people detect a change of direction since Edwin Glasgow QC took over from Simon Tuckey QC following the latter's appointment as a judge last February, Mr Glasgow insists he is only continuing the work begun by his predecessor. Indeed, he claims that many of the best-known 'transparent examples of creative accounting evaporated almost overnight' when the panel began a year ago.
But this reluctance to take credit should not give grounds for relaxation among the preparers of accounts. 'David Tweedie, Ron Dearing and I sincerely believe that there is room for substantial improvement in the standards of financial reporting and we consider that much of the criticism aimed at financial reporting has been justified,' Mr Glasgow said.
Nor should Mr Glasgow's preference for the terms 'view' or 'finding' over what he regards as the more pompous 'ruling' give anyone the impression of softness. Although no company has yet been taken to court, the panel is not afraid to litigate if it cannot reach agreement. It will not, though, make empty threats, since Mr Glasgow believes the panel's reputation is vital for the success of its work. 'Unless we command the respect of the profession and of account users generally we will fail.'
One threat to this respect is criticism over the time taken to reach decisions. The Trafalgar House case, for instance, was said to be under consideration for months.
Mr Glasgow acknowledges the problem but says that in the balance between fairness and promptness the former is more important. And, while the panel is happy to leave the business of clarifying Statements of Standard Accounting Practice to the ASB and its Urgent Issues Task Force, it can still be faced with complicated matters and a few grey areas.
He rejects suggestions that delays are caused by the panel being composed of part-timers. Drawing on a membership of 22, he is generally able to gather a quorum of six, balanced between account preparers and users, to consider a case and produce initial views within days. And it recently appointed three new members: Kit Farrow of Kleinwort Benson, Roger Looker of Rea Brothers and Christopher Swinson, until the summer senior partner of BDO Binder Hamlyn.
But Mr Glasgow does accept that time can be taken up by giving a company the opportunity to take advice when some aspect of its financial reporting is under scrutiny. This is unavoidable, he said, adding: 'You can't have any respect for a tribunal that shoots from the hip.' Mr Glasgow has great faith in the ability of fair play to provide the guidance the City and others need. He commends the structure created by Sir Ron Dearing as 'a model to the rest of the world'.
This approach appears to be working. But if this should change, even Mr Glasgow can see no alternative to statutory regulation.
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