UK audit companies urge FRC to stop public probe announcements
Large audit networks in the UK and several professional bodies have urged the Financial Reporting Council (FRC) to stop routinely naming the companies under investigation.
According to a Financial Times report, Deloitte, EY, KPMG and PwC have discussed acting together and filing complaints with the FRC about its current publication approach. Several mid-tier companies including BDO, Grant Thornton and RSM are also involved in the discussions.
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Sources told the publication that the representations also involve Forvis Mazars and Crowe, along with professional bodies such as the Institute of Chartered Accountants in England and Wales and the Association of Chartered Certified Accountants.
The move was prompted by an FRC consultation released in October and set to close on Friday.
In its investigation announcements, the FRC usually specifies the auditor, the client and the relevant audit period. Such details can often be used to infer who the engagement partner was.
Within the audit profession, some suggest identification should be limited to cases where serious wrongdoing is ultimately found, while others prefer naming only once an investigation has finished and a breach has been determined.
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe industry has also suggested that the FRC could omit the audited company’s name, reducing the likelihood that individual partners can be identified indirectly.
The FRC said it “welcomed the strong engagement” but could not comment on consultation responses before they were submitted.
It was also quoted as saying: “We do make clear in the consultation document that we will be looking at reviewing our publications policy, which will of course draw from the feedback we receive throughout this process.”
It added that it was “very rare” for an individual to be named at the start of an investigation. Notably, the Financial Conduct Authority (FCA) decided last year not to proceed with proposals to expand the practice of naming companies it is investigating, following strong opposition from parts of the financial sector.
The FCA relented amid concerns that such a step could deter business activity in the UK.
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