James Moore: Watchdog's more like a tortoise with this slow review of banks' auditing

Click to follow
The Independent Online

Outlook Lost in the heat of yet another day of shame for the banking industry was an important point made by Andrew Tyrie, the chairman of the Parliamentary Commission on Banking Standards.

Speaking in the House of Commons, he made it clear that the banks aren't solely to blame for the financial crisis and the problems it has subsequently thrown up.

Other actors on this ugliest of stages have to accept at least partial responsibility. Mr Tyrie pointed the finger at politicians, regulators, central banks, even consumers. And, of course, auditors.

Right on cue, up pops the Financial Reporting Council with an attempt to shut the stable door after the horse has bolted and caused a pile-up on the nearest motorway. It's going to conduct a (drum roll please) "thematic review" aimed at discovering why the pace of improvement in bank auditing would make a three-legged tortoise look like Usain Bolt. You'd think, given speeding this up has been identified by the FRC as a key priority, that its staff would be raring to go.

But no. The review isn't actually slated to start until April at the earliest. Our three-legged friend wouldn't have much to worry about if he lined up against the FRC, unless the race were to involve getting out to the country early to beat the festive traffic.

The review, says the FRC, is being announced early so that firms are aware of its expectations in time for the next year's audit season. Handy that. It means there ought to be ample time for the big audit firms to open negotiations about their fees. They'll draw air in through their teeth before talking gravely about "enhanced regulatory scrutiny" and "contingent risks". Hey presto, there's another ten per cent on the bill.

When the FRC issued its press release I thought it might be worth double checking whether there were any active investigations covering any of the audit work done during the financial crisis. The work that found the accounts published by several banks served as true and fair reflections of their financial states months before they went cap in hand to the taxpayer.

"We've not announced any such actions. All formal investigations under the FRC's disciplinary scheme are announced via a press notice and published on our website. We don't comment beyond this," replied a spokesman with typical sniffiness.

It does seem that the only thing the FRC has done quickly is to adopt many of the failings of the banking regulators that were identified by Mr Tyrie and his colleagues.