FAQs Professional Oversight

Professional Oversight

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What is the Professional Oversight team?

The Professional Oversight team fulfils the following statutory responsibilities for the FRC:

  • Ensuring that the FRC, as Competent Authority, may be satisfied that each Recognised Supervisory Body (‘RSB’) has the necessary arrangements in place to meet the requirements of the Delegation Agreement and should continue to be recognised as an RSB for the purpose of statutory audit;
  • Independent oversight of the audit qualification awarded by the Recognised Qualifying Bodies (‘RQBs’) for the purpose of statutory audit;
  • Independent supervision of Auditors General in respect of the exercise of their function as statutory auditors;
  • Recognition of RSBs and RQBs for local audit purposes under the Local Audit and Accountability Act 2014
  • The regulation of auditors ("third country auditors") of companies outside the  European Economic Area that have issued securities admitted to trading on UK regulated markets; and
  • The receipt of statutory change of auditor notifications from companies and statutory auditors in respect of public interest  companies;

​We report annually to the Secretary of State for Business, Innovation and Skills on the findings from this work.  These reports up to 2012 can be found here. Reports from 2013 onwards are included in the FRC’s annual report which can be found here.

By agreement with the Institute and Faculty of Actuaries (IFoA), the Professional Oversight team  exercises independent oversight of the regulation by the IFOA of its members.

By agreement with the chartered accountancy bodies, the Professional Oversight team exercises independent oversight of the regulation of the accountancy profession.

How do I make a complaint about a statutory auditor, accountant or actuary, or a firm of accountants, statutory auditors or actuaries?

If you want to make a complaint about the professional conduct of an accountant, statutory auditor or actuary, you should, in the first instance, bring your concerns to the attention of the senior partner of the firm concerned. Many firms of auditors, accountants and actuaries have formal complaint review procedures. If you are still not satisfied, you should contact the professional body of which the individual or firm is a member.

All of the main UK professional bodies have procedures for handling complaints, including, where appropriate, investigating possible misconduct. In addition most of the bodies have a method of appeals and independent review in certain circumstances. Most bodies provide details of their complaints procedures on their websites and are happy to provide additional information on request.

If you are unsure whether someone is a member of a particular body, you can ask the body of which you think the individual or firm is a member to confirm.

What is the role of the FRC?

The FRC has formal oversight responsibilities under the Companies Act 2006 in relation to statutory audit which include ensuring that those accountancy bodies recognised to supervise auditors and audit firms (Recognised Supervisory Bodies) have effective arrangements for the investigation of complaints against their members and member firms who are eligible for appointment as a statutory auditor, and against the body itself in respect of any matter arising out of its functions as a supervisory body.

By agreement with the six "chartered" accountancy bodies, we also exercise independent oversight of the way those bodies exercise their regulatory functions in relation to their members who are not eligible for appointment as statutory auditor and who provide non-audit accountancy services.

By agreement with the Institute and Faculty of Actuaries, we exercise independent oversight of the way this body exercise their regulatory functions in relation to their members who provide actuarial services.

We will therefore consider complaints that raise concerns about the way in which a professional accountancy or actuarial body has handled a complaint. However, the professional bodies are responsible for their own regulatory processes and we will not consider the merits of an individual case or second guess the conclusions reached by the professional body under its own processes.

How do I make a complaint about the way a professional accountancy or actuarial body has handled a complaint about their member?

You should first pursue the matter with the relevant body, most of which also have a system of independent review or other process to consider the way they have handled a complaint. If you are not satisfied with the application of the process you can draw your concerns to the attention of the FRC’s Professional Oversight team.

Please submit all relevant documentation and correspondence to us setting out the details of your complaint.

Unless you explicitly state that you do not want the details of your complaint shared with the relevant professional body, we will normally notify them of the details of any complaint we receive so that we can investigate it fully.

All complaints about professional bodies should be submitted in writing to:

FRC - Professional Oversight Team
8th Floor,
125 London Wall
London
EC2Y 5AS

Alternatively you can email your complaint to oversight@frc.org.uk. Please ensure to include your contact address.

How and when will the FRC respond to my complaint?

We aim to acknowledge all complaints within 10 working days of receipt. At this time we will notify you if your complaint does not fall within our remit. If a complaint does not fall within our remit, we will try and suggest organisations that may be able to assist with your complaint. We will also advise you if your complaint does not raise concerns that a professional accountancy or actuarial body has breached significantly its own standard procedures in the handling of your complaint about their member.

If your complaint raises concerns that a professional accountancy or actuarial body may have breached significantly its own standard procedures in the handling of your complaint about their member, we will normally seek the comments of the relevant body and look at papers relating to the case as appropriate. We will then normally write to you again to tell you the outcome of our consideration of the matter and whether the body proposes to take any action based on our comments. However, we do not have the power either to overturn any decision which the body has made in a case or to direct how the body should handle a case.

We may also use complaints put to us as part of our testing that the relevant body has appropriate systems for handling complaints and that these are working effectively in practice. We do not report the results of this work back to individual complainants. However, we report publicly each year to the Secretary of State on the overall results of our monitoring work in relation to the regulation of statutory audit and we may also publish other reports on specific aspects of our oversight work.

Does the FOIA apply to the FRC?

The Freedom of Information Act 2000 (the Act) was passed on 30 November 2000.  The Act:

  1. gives a general right of access to information held by public authorities, subject to the exemptions set out in the Act
  2. imposes an obligation on public authorities to produce and maintain a Publication Scheme approved by the Information Commissioner.  

The FRC is a public authority for part of its functions (see below).  

The FRC and the Act

The FRC is designated as a public authority under section 5 of the Act in relation  to the FRC’s exercise of those statutory functions delegated to it under Part 42 Companies Act 2006 (section 1252(3)) and the exercise of the functions pursuant to its appointment as the Independent Supervisor (section 1228(3).

Who needs to register as a Third Country Auditor with the FRC?

An audit entity must register with the FRC if it provides an audit report concerning the annual or consolidated accounts of an undertaking (company) incorporated outside the European Union whose transferable securities are admitted to trading on a regulated market in the United Kingdom. However, registration is not required if one of the following apply:

  • The company is an issuer exclusively of debt securities within the meaning of point (c) of Article 2 (1) of Directive 2004/109/EC prior to 31 December 2010, the denomination of which is at least EUR 50,000 per unit or, in the case of debt securities denominated in another currency, equivalent, at the date of issue, to at least EUR 50,000.
  • The company is an issuer exclusively of debt securities within the meaning of point (c) of Article 2 (1) of Directive 2004/109/EC from 31 December 2010 and the denomination per unit is, as at the date of issue, at least EUR 100,000 or, in the case of debt securities denominated in another currency, equivalent, at the date of issue, to at least EUR 100,000.

No registration is required under the current legal framework in the United Kingdom if the audit entity is a registered auditor in the United Kingdom or is approved in accordance with the Audit Directive by an EEA competent authority to carry out audits of annual accounts or consolidated accounts required by Community law.

These requirements are set by the Financial Conduct Authority in Policy Statement 08/6, published in June 2008. An audit report of a relevant issuer that is signed by an audit entity that does not meet these requirements has no legal effect in the United Kingdom.

Further information can be found at the Third country auditors section of the FRC website.

Under what circumstances does an auditor need to notify the FRC about a change of auditor?

Sections 522 to 525 of the Companies Act 2006, as amended, set out the requirements on auditors and on companies to send statements and notices to the “appropriate audit authority” when an auditor ceases to hold office. In respect of an audit of a public interest company the appropriate audit authority is the FRC in its capacity as the Competent Authority. Both auditors and companies need to notify the “appropriate audit authority” and there are separate requirements placed on auditors and on companies by this legislation.  

Guidance on the circumstances in which the FRC is the appropriate audit authority, how the notification to the FRC should be made, and what it must cover is provided in the form of: 

a flow chart for audit firms and
a flow chart for companies

What is the FRC role in regulating statutory auditors?

Under The Statutory Auditors (Amendment of Companies Act 2006 and Delegation of Functions etc.) Order 2012, which replaced a previous delegation order, the Government has delegated to the FRC most of the responsibilities and powers in Part 42 of the Companies Act 2006.

The delegated authority includes powers to make binding regulations in specific areas. To see the FRC Regulations that are in force, please click here.

What is the difference between an accountant and a statutory auditor?

An accountant may offer a wide range of accountancy and related services (for example: accounts preparation, tax advice, payroll). However, only those accountants who are also registered as auditors are entitled by law to provide statutory audit services, most commonly the audit of limited companies.

How does the FRC monitor the Professional Accountancy Bodies?

By agreement with the six chartered accountancy bodies, the FRC has a non-statutory role for oversight of the regulation by the professional accountancy bodies of their members beyond those that are statutory auditors.

The FRC's work to oversee the regulation of statutory auditors is also relevant to the oversight of the accountants more generally, as the regulatory systems often apply to both. In addition the FRC may review other regulation by the professional accountancy bodies of their members,for example:

  • education,
  • training,
  • continuing professional development,
  • standards,
  • ethical matters,
  • professional conduct, and
  • discipline, registration and monitoring,

including making recommendations on how these activities might be improved.
 
The bodies have agreed that they will consider  the FRC recommendations carefully, and either

  • implement them within a reasonable period, or
  • give reasons in writing for not doing so.