Credit crunch to influence watchdog

by Catherine Woods - Tuesday, 30th October 2007 -

Sectors that may be affected by the credit crunch are likely to come under the scrutiny of the Financial Reporting Review Panel next year.

FRRP chairman Bill Knight says the panel will announce in the coming weeks the sectors it will focus on for 2008/09. “Our thoughts are directed to the credit crunch and the things that will come out of that,” he says.

The panel reviews accounts for compliance with the law and accounting standards. This year it’s focused on accounts in the travel and leisure, retail, utility, telecommunications and media industries.

The FRRP reads approximately 300 accounts each year and has the power to take a company to court in order to have it restate its accounts. However, it has never used this power.

Last year, it wrote to 180-odd companies because it had queries about their accounts.

Knight emphasises that a letter doesn't mean the accounts need to be restated. “Normally we’re just asking for information,” he says.

If companies do receive a letter, Knight says they should “take it seriously, take advice and take time to reply”.

“What we like is a very good thorough response.”

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