All hail the power of the Panel.

(From Financial Director)

Byline: Peter Williams is a chartered accountant and freelance journalist.

Financial directors who assume that financial reporting is only being played on the international stage should check out the UK's Financial Reporting Review Panel, a long-standing part of the Financial Reporting Council (FRC), which has now assumed lead responsibility for corporate governance in the UK.

According to reports from a meeting it held with representatives from the Consultative Committee of Accountancy Bodies in late 2003, the Panel welcomes publicity about its working but much seems to be shrouded in mystery. As part of the post-Enron reforms, the Panel has switched from reactive to proactive in looking at foul-ups in company accounts. But FDs can have little idea how that is actually working in practice.

According to the Panel, it is recruiting five people to perform the analysis of the selected accounts. This is a modest number, compared with the 200 lawyers the SEC keeps on the payroll to crawl over the accounts of US-quoted companies. The recruitment process will take place over the next six months from among technical managers within accountancy or their equivalents.

A key plank of the reforms was a memorandum of understanding between the FRC and the Financial Services Authority. The deal is that, through an annual meeting between the two bodies, the FSA will inform the Panel of the marketplace risks at a broad macro level and the Panel will then assess particular risks. The Panel seems to have been landed with the lion's share of the work. As well as the relationship between the Panel and the FSA, the FRC has set up an informal advisory group to help the Panel deal with this new phase in its existence. Who is on that informal group, how they were chosen and what advice they are expected to offer is not yet public information.

From the Panel/CCAB meeting, it emerged that the Panel had already started its proactive review of companies. It is unclear whether individual companies will be informed in advance that their reports and accounts are going to be given the once-over. It seems likely that companies will eventually know, although the first news may well be a letter landing on the FD's desk.