Accountants, auditors and actuaries beware: the FRC continues to show its teeth, as its future stands in the balance
In widely publicised news, the Financial Reporting Council (FRC) continues to levy record high fines and has cast criticism on a number of firms. What appears to be an unforgiving stance taken by the regulator seems to come in the wake of the review into whether or not it should be disbanded, or folded into another regulatory organisation.
In April of this year the government launched a landmark, independent review of the FRC; the ultimate regulator for auditors, accountants and actuaries.
The FRC was last subject to a review six years ago, in 2011. However, in light of heavy criticism, with critics suggesting the watchdog is too close to the industry it supervises and following a series of high-profile corporate failures, a landmark review is now being conducted.
The review is due for completion by the end of 2018 and includes a public consultation. It will assess the FRC's governance, impact and powers.
In what may not have come as a shock to the regulator given the criticisms being made already, the review will also consider whether the FRC should be disbanded, or folded into another regulatory organisation.
With some of the FRC's harshest critics standing for the regulator to be disbanded or replaced, it seems entirely possible that the FRC's future is on the brink.
Perhaps unsurprisingly and in a bid to improve trust, the FRC has published a new Corporate Governance Code and has levied record high fines off the back of a number of audits, against auditors and accountants.
Most alarmingly, last month the FRC imposed a record high fine of £10million (later reduced to £6.5million) following allegations of misconduct off the back of an audit, being the highest fine it has ever raised.
So what does this mean for accountants, auditors and actuaries? Clearly, the FRC is showing no signs of going down without a fight, and seems to be using all means necessary to show its teeth. Certainly the fines being levied are not low value, and given that the FRC does not have a cap on the level of fines that it can raise against firms there is the possibility that even higher fines could be levied in the future.
This is certainly an area for auditors, accountants and actuaries to be aware of. With the review into the FRC ongoing, it seems apparent that the somewhat aggressive stance taken by the FRC is an attempt to show its teeth, in a bid to support not only its role, but its existence.