Accountants face grilling: Labour MP aims attack at regulators

THE Labour MP Brian Sedgemore is preparing to pillory the Institutes of Chartered Accountants when they appear before the House of Commons Treasury and Civil Service Committee on Tuesday.

The Institutes are being examined as part of the committee's inquiry into financial services regulation, which has already taken the Personal Investment Authority and other retail regulators to task.

Mr Sedgemore, a committee member, wants to highlight what he sees as the English Institute's regulatory shortcomings by asking it to justify its handling of the long-running Film Finance case.

Film Finance was a company that became the subject of alleged fraud and illegal share dealing in the 1980s. KPMG Peat Marwick, the accountancy firm, was asked to report on the company's affairs, and that report was the subject of a complaint to the Institute.

'I shall be going in very hard on the Institute on Tuesday,' said Mr Sedgemore, MP for Hackney South and Shoreditch. 'They have whitewashed one of their members. There is clearly something radically wrong with their system of regulation, and if they cannot put it right, Parliament should do so.'

He claimed that auditors had a poor record of identifying misconduct and reporting it, either to shareholders or regulatory authorities, and argued that the Institute had a duty to encourage such reporting.

'Accountants aid and abet fraud by letting their clients off,' Mr Sedgemore added.

A spokesman for the Institute said that Brian Currie, vice-president of the English Institute, would attend Tuesday's hearing with Ronald Ironside, representing the Scottish Institute. He confirmed that the English Institute had received a complaint about KPMG's report into Film Finance, and it was being investigated.

'We are there to answer any questions the committee may wish to put to us,' said Brian Picking, an official in the English Institute's regulatory department. 'I was not previously aware that Mr Sedgemore intended to raise this particular case.'

KPMG is also expected to attend the hearing, but had no comment on the complaint or Mr Sedgemore's intentions.

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