The Financial Reporting Review Panel (FRRP) might not strike you as an organisation that is likely ever to cause a company much grief, but its powers do include being able to go to court to seek an order requiring a company to submit accounts that meet the currently required financial reporting standards.
The reason this has become important is that the FRRP has retained a firm of accountants to check for ‘qualified’ accounts (ones where the auditors express reservations about or disagreement with the way accounting information is presented) and is writing to the directors of the companies concerned to warn them that it has the power to require them to resubmit their accounts to the Registrar of Companies in a form that meets the appropriate accounting standards.
If the transgressions continue, the FRRP has indicated that it will not hesitate to use its teeth to require companies to file amended accounts.
“This could prove to be expensive – and not just because of the additional accounting and auditing fees,” says <<CONTACT DETAILS>>. “Given that many companies file accounts near to the filing deadline, this could lead to the amended accounts being filed late with the Registrar of Companies and HM Revenue and Customs, which could lead to financial penalties being levied. Furthermore, the auditors will seek audit comfort up to the new date of their report, which may mean in particular that extensive reappraisal of balance sheet values based on actual realised values may be necessary. The days in which a relaxed attitude could be taken to non-compliance with the rules relating to accounting disclosure are over.”
In addition, directors of companies that have to file amended accounts in these circumstances can be held personally liable for any court costs and the cost of revising the accounts.
For advice on all company law matters, contact <<CONTACT DETAILS>>.