UK’s FRC consults on new audit enforcement regime

With the EU’s audit regulation and audit directive coming into force in June the UK’s Financial Reporting Council (FRC) is consulting on its new audit enforcement procedure for audits of Public Interest Entities (PIE) – which include listed companies, credit institutions and insurance undertakings.

The FRC has developed its new audit enforcement procedure in order to fulfill its role as the UK’s competent authority and to implement its mandatory responsibility for audit enforcement in relation to PIE and any specific non-PIE matters. The FRC said the new EU legislation requires ‘effective systems of investigations and penalties to be in place, to detect, correct and prevent inadequate execution of the statutory audit’, and the new procedure is required to fulfill this requirement.

The consultation paper outlines the rationale for the change, the scope and threshold of the new procedure, sanctions, routes for early resolution of disputes and the differences between the old and new enforcement regimes. The proposed enforcement procedures are also provided along with the funding proposals. Questions for comment focus on the areas of enforcement and funding.

The deadline for response is 4th May 2016 and these can be sent to consultation@frc.org.uk.

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