Audit Enforcement Procedure (effective from 1 July 2026)
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Notice
This version of the AEP is effective from 1 July 2026. For the effective version until 30 June 2026, see:
Introduction
In June 2016, the FRC became the 'competent authority' for audit in the UK under new legislation which came into force following the EU Audit Regulation and Directive.
Enforcement action is taken under the FRC’s Audit Enforcement Procedure (AEP). On this page we set out:
- the scope of the AEP
- an outline of the AEP process, including the Early Admissions Process and Accelerated Procedure
- the AEP itself and other supporting documents.
Scope of the AEP
The FRC will investigate matters relating to the audits of:
- Public Interest Entities (PIEs), being listed entities, credit institutions and insurance undertakings
- AIM-listed companies with a market capitalisation in excess of €200m
- Lloyds Syndicates.
Other audit-related investigations have been delegated to the Recognised Supervisory Bodies (RSBs), such as the Institute of Chartered Accountants for England and Wales, but the FRC can reclaim an investigation from an RSB if it chooses to do so.
Outline of the AEP process
There are up to four stages of an AEP investigation:
- Initial enquiries: these are conducted by the Case Examiner, under the oversight of the Executive Director of Supervision, and may result in a referral by the Designated Officer (typically the Executive Director of Supervision) to the FRC’s Board or Conduct Committee to decide whether the matter should be referred to the FRC’s Executive Counsel to investigate or to use the Accelerated Procedure. The Conduct Committee will also decide whether the fact of an investigation or use of the Accelerated Procedure is to be published.
- Investigation: Executive Counsel’s investigation will be conducted by an in-house team of lawyers and forensic accountants, culminating in an Investigation Report. At the conclusion of the investigation, Executive Counsel will issue a Decision Notice which will set out any proposed breaches of Relevant Requirements and proposed sanctions. If the breaches and sanctions are accepted by the investigation subject, the process will end there. Agreed Decision Notices are subject to approval by an Independent Reviewer. Publication of sanctions issued is mandatory.
- Tribunal: a matter shall be referred to the Tribunal if it is neither concluded at the Investigation stage nor otherwise settled. The Tribunal will hear evidence and determine whether or not to make an Adverse Finding that the investigation subject has breached Relevant Requirements. Where an Adverse Finding has been made, the Tribunal may impose sanctions. Publication of sanctions issued is mandatory.
- Settlement: at any time after a Notice of Investigation has been issued but before a Tribunal has issued its decision, the parties may seek to agree settlement. Under the Early Admissions Process, Executive Counsel may agree to the investigation subject carrying out their own self-review of the matter, as an alternative to conducting a full investigation, and may use the resulting admissions as the basis for settlement. Executive Counsel will issue a Settlement Decision Notice if the terms of settlement are agreed. Agreed Settlement Decision Notices are subject to approval by an Independent Reviewer. Proceedings will continue if settlement is not reached.
Accelerated Procedure: this procedure provides an alternative route to settlement by using information already held by the FRC as the basis for proposing breaches and sanctions for agreement by the investigation subject. If the investigation subject is unwilling to settle the matter, or if it otherwise appears that it would be more suitable for the matter to be dealt with by some other means, Executive Counsel can refer it back to the Conduct Committee.