The invitation to contribute to the Kingman review of the
FRC published today mentions in passing that the FRC was established after Ron
Dearing’s 1988 report “The Making of Accounting Standards”. I can’t find my
copy but I remember the cover – glossy red with an overall design based on the
word “red” in fancy lettering. I was told by an ICAEW employee at the time that
this design was requested by Dearing as it was not only the colour of the cover
but also his initials.
Not long after, ICAEW published a further report with a red
cover. This was written by Professor David Solomons. I still have my copy. It
is a much more sober publication printed in a very small font and it contains a
detailed and scholarly analysis of the conceptual and theoretical aspects of
accounting standards.
The Dearing report addressed the structure of accounting
standard setting: Solomons addressed the content of the standards themselves.
Both are fundamental to the issue of trust in corporate reporting and I think
they need to be addressed at the same time. How can we judge whether the FRC is
fit for purpose in its role as guardian of
corporate reporting and corporate governance, without considering
whether both corporate reporting and corporate governance are fit for purpose?
