NEWS | Financial Directors
FINANCE DIRECTORS TOLD TO UP THEIR STANDARDS OF REPORTING
Accounts watchdog says too many overly optimistic in reports
COOK THE BOOKS: ONE THIRD OF
ACCOUNTANTS KNOW OF MISLEADING
ACCOUNTS BEING FILED
Half of accountants surveyed pressured to turn a blind eye
MORE THAN ONE THIRD of accountants of the accountants surveyed by know of a
senior staff member deliberately going along with misleading accounts. Half
job board
CareersinAudit.com have either been pressured by a senior manager or partner to turn a blind eye to unethical and inaccurate reporting. What is eyepopping is how widespread the practice is. Nearly a quarter of accountants (22 per cent) believe that
more than 25 per cent of the profession have helped clients create a set of deliberately misleading accounts. Accountants who wished to remain anonymous supplied
the jobs board with a litany of misdemeanours. One said: “I pointed out serious accounting/legal violation
FINANCE DIRECTORS have been told to up their game in key elements of corporate governance and reporting, aſter a review found a multitude of basic errors in reports. In an open letter to finance directors, the Financial
Reporting Council (FRC), the watchdog and regulator which aims to improve transparency in business, says that many companies misapply the UK corporate governance code. Based on a review of 220 annual and interim
reports, the FRC found that many companies give an unbalanced depiction of their performance – with some showing a tendency “to rely on overly optimistic judgments – amid continued weaknesses in companies reporting on the basic health of their accounts. The FRC made the findings as part of its Development
in Corporate Governance and Reporting review, published on October 24. Paul
George, executive director of corporate
governance & reporting at the FRC, said: “A lack of transparency in financial and governance reporting, undermines trust in business. More accurate reporting and better governance practices are needed to reverse this trend. “The UK faces challenges with corporate reporting
aſter EU Exit. Companies should therefore do more to meet the expectations of the market and society in order for the UK to maintain its position as an attractive home for global capital. That said, reported compliance with the code
is high with 95 per cent of FTSE 350 companies reporting that they comply with all but one or two of the 55 provisions.
6 DIRECTOR OF FINANCE
DOFONLINE.COM
by a senior executive and was penalised for doing it”, while another said he knew of misleading reports being presented to the board. Another accountant said that a senior manager was advised how to wriggle out of paying tax. Accountants surveyed were resolute about wanting
to stay within the law. More than half (51 per cent) said that anybody who signs off a deliberately misleading set of financial statements should be banned from the profession. Nearly one fiſth said miscreants should be fired from their job and 10 per cent said that prison should be punishment. Yet two thirds (65%) of accountants believe that
businesses do not do enough to protect whistle blowers. They are afraid of being pushed out of companies if they do report misconduct. Simon Wright, managing director of
CareersinAudit.com,
said: “There is an underlying concern about the repercussions for towing the ethical line; whether this is about losing their job, losing a client for speaking up, a risk in promotion or damaging their career reputation. “More has to be done, not only at the company but
industry level to create a code of practices which encourages the right working culture to report fairly and without fear.”
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