On 17 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. We monitor the quality of audits of public interest entities and take enforcement action where necessary.
The FRC’s Audit Enforcement Procedure (AEP) is effective from 17 June 2016.
We will use the AEP to investigate allegations in relation to statutory audit matters which have not been delegated to the RSBs. These ‘Retained Matters’ are more fully defined in the FRC’s Delegation Agreements with the RSBs (available here) but broadly include audits of:
All other statutory audit enforcement matters not ‘retained’ by the FRC will usually be delegated to the RSBs who will continue to investigate those delegated matters in accordance with their own procedures.
Links are provided to the AEP and the various supporting Guidances and Policies here.
- Public Interest Entities (PIEs);
- AIM companies with a market capitalisation in excess of €200m;
- Investigations which the FRC may reclaim from the RSBs from time to time (Reclaimed Matters).
Accountancy and Actuarial Professional Discipline (in public interest cases)
The FRC is the independent disciplinary body for accountants, accountancy firms and actuaries in the UK. It operates disciplinary Schemes for the accountancy profession and the actuarial profession.
The disciplinary Schemes operate independently of the professional bodies. The Conduct Committee has oversight over the operation of the disciplinary arrangements. A majority of its members are non-accountants and actuaries.
The Conduct Committee’s responsibilities in this regard include:
- Operating independent disciplinary Schemes for:
- The investigation of cases which raise or appear to raise important issues affecting the public interest in the UK; and
- Where appropriate, bringing disciplinary proceedings against those whose conduct appears to have fallen short of the standard reasonably to be expected of members or member firms of the relevant professional body.
- Keeping under review the working of the Schemes and the supporting Regulations to ensure that they are operating effectively; and
- Regular publicity for the FRC’s disciplinary activities and achievements as appropriate.
The Accountancy Scheme covers members and member firms of the following bodies:
Institute of Chartered Accountants in England and Wales (ICAEW)
Chartered Institute of Management Accountants (CIMA)
Chartered Institute of Public Finance and Accountancy (CIPFA)
Institute of Chartered Accountants in Ireland (ICAI)
Association of Chartered Certified Accountants (ACCA)
Institute of Chartered Accountants of Scotland (ICAS)
The Actuarial Scheme covers members of the Institute and Faculty of Actuaries and former members of the Faculty of Actuaries (prior to its merger with the Institute of Actuaries).
The FRC deals with cases of potential misconduct which raise or appear to raise important issues affecting the public interest in the UK. All other cases of potential misconduct continue to be dealt with by the professional bodies above. Complaints about individual actuaries, accountants and accountancy firms should, in the first instance, be addressed to the body of which that individual or firm is a member. Please download the contact list
for the bodies.
Aims and Objectives
The disciplinary arrangements contribute to the achievement of the FRC’s mission by:
- Safeguarding the public interest by protecting the public, maintaining public confidence in the accountancy and actuarial professions and declaring and upholding proper standards of conduct by accountants and actuaries;
- Providing a demonstrably fair and independent system for investigating, and where appropriate, taking disciplinary action in significant public interest cases of potential misconduct;
- Imposing appropriate sanctions where misconduct has been proved; and
- Seeking to deter future misconduct.
The Schemes and supporting Regulations contain the detailed rules which govern how cases are dealt with by the FRC.
In brief, the stages of the disciplinary process are:
- Decision to investigate (in some cases following preliminary enquiries)
- Decision whether to bring disciplinary proceedings against any firm or individual
- Referral to Disciplinary Tribunal
- Tribunal hearing
- Determination and imposition of sanction and/or costs orders
The FRC can start a disciplinary investigation in one of two ways: (i) the professional bodies can refer cases to the FRC; and (ii) the FRC may decide of its own accord to investigate a matter. The Conduct Committee will consider each case identified or referred to it and decide whether or not the criteria for an investigation are met.
Investigations are conducted by Executive Counsel within the Enforcement Division. The decision about whether to bring disciplinary proceedings rests with Executive Counsel. If disciplinary proceedings are to be commenced, Executive Counsel will file a complaint with the Conduct Committee. The Conduct Committee will instruct the Convener to appoint a Disciplinary Tribunal.
Transparency is provided for in the disciplinary Schemes at various stages of the disciplinary process. All decisions made by the Conduct Committee, Executive Counsel and Tribunals are publicised unless the Conduct Committee considers publication would not be in the public interest. Further detail is set out in the FRC’s Publication Policy for the Disciplinary Schemes.