Reforms to The Financial Reporting Council’s (FRC) Audit Enforcement Procedure (AEP) became effective at the beginning of July. Via three new pathways, they raise the threshold for commencing enforcement, forming part of a philosophical shift by the regulator towards early engagement and faster resolution.

When concerns arise through a whistleblower report, awareness of potential misconduct, or a new internal investigation, the reforms mean that it is more likely that auditors engage earlier with the FRC.

Important considerations arise for firms about whether, when and how to self-report issues to regulators. In practice, two key risks emerge: