Accountancy Scheme

Published: 25 September 2023

4 minute read

Introduction

The FRC is the independent disciplinary body for accountants and accountancy firms, and operates a disciplinary scheme for the accountancy profession. The Accountancy Scheme operates independently of the professional bodies. Its scope is now limited following the introduction of the Audit Enforcement Procedure, to cover all statutory audit matters, in June 2016.

Enforcement action is taken under the Accountancy Scheme. On this page we set out:

the scope of the Accountancy Scheme;
an outline of the disciplinary process;
links to the Accountancy Scheme itself and other supporting documents.

The Scheme was originally adopted by the Accountancy Investigation & Discipline Board on 13 May 2004 and amended thereafter by the Accountancy & Actuarial Discipline Board and the FRC.

Scope of the Accountancy Scheme

The Accountancy Scheme covers Members and Member Firms of the following professional 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 FRC will commence an investigation into a Member or a Member Firm if:

the case raises or appears to raise important issues affecting the public interest in the UK; and
there are reasonable grounds to suspect that there may have been Misconduct.

The decision to investigate is made by the Board or its Conduct Committee. Public interest considerations as to whether to start an investigation include (but are not limited to):

the impact on a significant number of people in the UK;
the loss / potential loss of significant sums of money;
whether the conduct undermines confidence in financial reporting or corporate governance in the UK.

Outline of the Accountancy Scheme

The Accountancy Scheme and Accountancy Regulations contain the detailed rules which govern how cases are dealt with by the FRC. We have set out a summary of the key stages below:

Initial enquiries / Referral: The FRC can start a disciplinary investigation in one of two ways:
1. a referral from a professional body; or
2. an investigation of its own accord. These cases are identified by the Case Assessment team.

In each case, the FRC’s Board or its Conduct Committee will decide whether the criteria for an investigation are met. If they are, the Board or Conduct Committee as applicable will refer the case for an investigation and will also decide whether the fact of an investigation should be published.

Investigation: the Executive Counsel’s investigation will be conducted by an in-house team of lawyers and forensic accountants, usually culminating in an Investigation Report. Executive Counsel may also instruct an external expert to provide an expert opinion and engage external Counsel to advise on the merits of the case.
Proposed Formal Complaint: At the conclusion of the investigation, the Executive Counsel will deliver a Proposed Formal Complaint if they consider that:
1. there is a realistic prospect that a Disciplinary Tribunal will make an Adverse Finding against a Member or Member Firm; and a hearing is desirable in the public interest.
2. If Executive Counsel considers that either of these two limbs is not met, the process will end there.
Representations: Once a Proposed Formal Complaint has been served, the proposed Respondent(s) will have 8 weeks to make any representations.
Formal Complaint: If, having reviewed any representations, Executive Counsel remains of the view that:
1. there is a realistic prospect that a Disciplinary Tribunal will make an Adverse Finding against a Member or Member Firm; and
2. a hearing is desirable in the public interest,

then Executive Counsel will deliver a Formal complaint against the relevant Member or Member Firm.

Tribunal: A Disciplinary Tribunal will be appointed to hear the Formal Complaint. At a hearing, the Disciplinary Tribunal will either make an Adverse Finding in respect of part or all of the alleged Misconduct or dismiss the Formal Complaint. Where an Adverse Finding has been made against a Member or a Member Firm, the Disciplinary Tribunal may impose sanctions.
Settlement: At any stage after the commencement of an investigation but prior to any final determination of the Formal Complaint, Executive Counsel may enter into settlement discussions with a Member or a Member Firm in respect of a part or the whole of any alleged Misconduct.

Disciplinary Tribunal

Decisions of the Disciplinary Tribunal can be found on our Enforcement Cases page.