Accounting watchdog plans shake-up to improve regulation
FRC will expand its enforcement powers and speed up investigations
The UK’s accounting regulator has announced a shake-up of its remit that will expand its enforcement powers and speed up investigations into auditors as it moves towards its transition to a new regulatory body.
The Financial Reporting Council will increase its levies to £47.2m, from £41.7m, recruit more than 100 employees and improve its decision-making process on carrying out investigations.
The measures are in line with demands set out in a government-backed review by Sir John Kingman into the FRC’s powers and effectiveness, carried out last year. The review recommended the regulator should be replaced by a stronger, statutory watchdog that would also have powers to sanction company directors for accounts failings, called the Audit Reporting and Governance Authority.
It plans to add lawyers and forensic accountants to speed up its enforcement procedures and will further expand its monitoring of challenger firms, such as BDO and Grant Thornton, as well as over the Big Four of PwC, Deloitte, KPMG and EY.
“The strategy builds a bolder, more forceful regulator that will act with pace in supervising and holding companies to account,” said Jonathan Thompson, chief executive of the FRC. “Ahead of the FRC’s transition into the Audit, Reporting and Governance Authority (ARGA), I am determined we use our powers to the fullest, to respond to corporate governance challenges.”
The body plans to increase the number of audit quality and corporate reporting reviews it carries out by 25 per cent.
“The public has a major interest in the health of companies which is why we plan to serve that public interest by using our powers to the fullest within our existing regulatory scope,” Sir Jonathan said.