The UK Financial Reporting Council (FRC) will determine itself sanctions to auditors without referring the case to the Recognised Supervisory Bodies (RSB), according to the reviewed Auditor Regulatory Sanctions Procedure.
The reviewed procedure rules come into force today as a consequence of the amendments to the Companies Act 2006 which allows the body performing independent monitoring functions to determine sanctions or suggest undertakings following an inspection.
The procedure rules apply to those audit firms which are registered with the Institute of Chartered Accountants in England and Wales (ICAEW) and subject to independent monitoring by the FRC’s Audit Quality Review.
"Sometimes our inspections reveal shortcomings that we expect the firms to address. The new procedure enables the FRC to require such work to be done and if appropriate a penalty to be applied without reference to the professional bodies," FRC chief executive Stephen Haddrill said.
Earlier this year, the FRC opened a consultation on the rules and received 13 responses from industry players, including the Big Four firms and three professional bodies: the ICAEW, the Association of Chartered Certified Accountants (ACCA) and the Institute of Chartered Accountants of Scotland (ICAS).
There are five RSB, which are ICAEW, ACCA, ICAS, Chartered Accountants Ireland and the Association of Authorised Public Accountants, a subsidiary of ACCA.