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During 2018, the Financial Reporting Council came under intense scrutiny. Following a Freedom of Information Act request by IPE journalist Stephen Bouvier on the Office of National Statistics, it became clear that the FRC became a public body not in 2017, 2016 or 2014 (the FRC’s account varied) but earlier.
The Bouvier research indicated a date as early as 1990 as the date the FRC became a public body. The significance being that the FRC had managed to bypass ‘Standards in Public Life’ requirements of the Nolan Committee and then the Cabinet Office. This has significant implications for: FRC recruitment (it did not use open advertising) which was carried out on a revolving door basis with the accounting firms; procurement, in avoiding proper public tenders, including for legal advice; it was not subject to conflict of interest requirements; it avoided Freedom of Information Act status; and more generally just did not apply the rules for spending public money.
Further to that Baroness Bowles, former Chair of the Economic Affairs Committee of the European Parliament, tabled Parliamentary questions. That process has revealed more detail which includes that:
- the FRC was public from 1990, and began a campaign of avoiding that status from 2004
- the justification being the it wanted to be a ‘collaborative’ body, based on the CBI and the accounting trade bodies
- the FRC executive in maintaining incorrectly that they had an opt out, were removing themselves from the pay cap applicable to public bodies, which is set at the salary of the Prime Minister
- the FRC was not subject to austerity capping of salaries that applied to the public sector
- the deviation from status was not approved by Ministers, but officials at the sponsoring department, the DTI, then called BIS, now called BEIS
- the DTI official responsible for the FRC at the time it was avoiding public body status from 2004, then became the CEO of the FRC
- the status of the FRC as public body was not a subjective choice, but was set out by the Government Resources and Accounts Act 2000
- as of mid-2018, the FRC has still not necessarily met all public body requirements