Closure of investigation into the conduct of Ernst & Young LLP

News types: Investigations

Published: 26 September 2014

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The Financial Reporting Council (FRC) announces the closure of the investigation into the conduct of Ernst & Young LLP, a Member Firm of the ICAEW and an individual ICAEW Member regarding potential breaches of the Ethical Standards for Auditors in relation to the non-timely disposal of a share-holding in a client entity.


Following investigation, Executive Counsel for the FRC, Gareth Rees QC, concluded that he did not consider there to be a realistic prospect that a Tribunal would make an adverse finding against Ernst & Young LLP and the former Member. Consequently, no further action will be taken and the case will be closed.

The FRC’s investigation was announced on 5 December 2013.

Notes to editors:

  1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing.  We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies

  2. In relation to disciplinary matters, the FRC is the independent, investigative and disciplinary body for accountants and actuaries in the UK dealing with cases which raise important issues affecting the public interest. In brief, the stages of the disciplinary process are:

  • Decision to investigate

  • Investigation

  • Decision whether to bring disciplinary proceedings against Member Firm or Member and, if so decided, 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 and the Professional Discipline team within the Conduct Division. If disciplinary proceedings are commenced, Executive Counsel delivers a complaint to the Conduct Committee. The Conduct Committee then instructs the Convener to appoint a Disciplinary Tribunal.

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