FRC publishes latest Annual Enforcement Review
News types: Publications
Published: 25 July 2024
The Financial Reporting Council (FRC) has today published its sixth Annual Enforcement Review (Review) which provides a summary of FRC enforcement activity for the year ending 31 March 2024.
This year’s Review explains how the principles of proportionality and consistency are embedded throughout the FRC’s approach to investigation and enforcement work. An example of this is the effective use of constructive engagement as an alternative to formal investigation. Constructive engagement focuses on ensuring that less serious breaches are swiftly rectified and that the risk of repetition is adequately addressed. This year, three times as many cases were identified for constructive engagement as were referred for investigation.
The Review analyses high-profile cases concluded in the last year and also draws out important themes and lessons from recently concluded cases. These include failures in relation to fundamental aspects of an audit such as auditor objectivity and integrity, understanding the entity, audit planning and evidence, professional scepticism, and the approach to the risk of fraud.
As usual, the Review reports on case activity and numbers, timeliness - with both key performance indicators achieved this year against minimal headcount growth - and sanctions imposed.
The FRC’s Executive Director of Enforcement, Elizabeth Barrett, said:
“The past year was notable for the completion of several high-profile and complex cases at the FRC, most significantly the conclusion of the major Carillion audit investigations and the investigations into various audits of London Capital & Finance.
The FRC will continue to prioritise fair, robust and proportionate enforcement outcomes to uphold trust in financial reporting and audit which supports confidence to invest in UK companies and in turn the UK’s economic growth and international competitiveness.”
Read the Annual Enforcement Review 2024.
Listen to our latest podcast episode, where Kate O’Neill, Director of Stakeholder and Engagement and Corporate Affairs, and Elizabeth Barrett, Executive Counsel and Executive Director of Enforcement, discuss insights from this year’s Review.