A trade publication for accountants is reporting in Britain that the Department of Trade and Industry is investigating the English Institute of Chartered Accountants for failing in its regulatory role under the Companies Act. They could face criminal prosecution.

Accountancy Age says the Institute admitted broke the law "by failing to keep a proper record of Coopers & Lybrand individuals eligible to conduct audits.'' The Institute is required to keep a register of firms and individuals eligible for professional service as auditors. And by law, it is required to make changes no more than ten working days after learning of them.

Accountancy Age quotes Mr. Raymond Fear, the director of the Institute's practice regulation as saying: "We have found that we are in breach of the regulations and it will be put right. Whether the DTI wishes to take any action is up to it, but I would hope that it understands that these things do occur.'' The publication notes the DTI could withdraw the Institute's status as a supervisory body and prosecute both it and individual officers if it felt that they had knowingly or recklessly supplied false or misleading information on a material point.

But Mr. Fear said, "We do not believe that we have done so. `Recklessly' would mean not taking any care whatsoever. I do not think that that would apply in this case.'' Last July, Coopers told the Institute that five of the individuals still on the audit register had retired or resigned from the firm, one as much as a year before.

Coopers also told the Institute to delete 13 affiliates who had not yet become partners in the firm, and to add the names of nine partners who should have been included.