In our monthly roundup of developments in audit and governance, FRC plans £1m fund to monitor audit firms, mid-tier firms stalled by audit rotation rules, regulator rejects claims of ‘internal cultural problems’
FRC plans £1m fund to monitor audit firms
The Financial Reporting Council (FRC) plans to beef up monitoring activity of the six largest UK accounting firms and introduce a harsher penalty regime for audit failure with the risk of £10m fines for worst examples of audit failure, from June 2018.
The move will see the accounting watchdog adopt a far more rigorous approach to the way it reviews work carried out by the Big Four and mid-tier firms BDO and Grant Thornton, while increasing fines to £10m or more for ‘seriously poor’ audit work.
The regulator’s powers will be limited however, as although it is the competent authority for audit firms, it will have to rely on the cooperation of firms when addressing any concerns.
