Question to the Department for Business, Energy and Industrial Strategy:

To ask Her Majesty's Government why their consultation document Insolvency and Corporate Governance, published on 20 March following the collapse of Carillion, refers to guidance from the Institute of Chartered Accountants in England and Wales (ICAEW) instead of guidance from the Financial Reporting Council (FRC); in particular, why that document states that “the link between the profit in a company’s financial statements and any reserves available for distributions is elaborated in guidance issued by the ICAEW”; and what assessment they have made of the respective roles of the ICAEW and the FRC in issuing such guidance.

The consultation document refers to guidance published jointly by the Institute for Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland. The guidance (Technical Release TECH 02/17) is aimed at members of the institutes who are directors, or who are advising directors, determining the distribution of profits by their companies. It sets out the generally accepted practice on realised and distributable profits under the Companies Act 2006.

This guidance is separate to the Financial Reporting Council’s (FRC) guidance, which I explained in my answer of 12 February to the noble Baroness. The FRC’s guidance is on auditors’ responsibilities in respect of certain reports and statements which they might be called upon to provide in addition to the audit report.