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Britain’s accounting watchdog will reclaim powers to ban auditors under proposals announced on Thursday.
The powers were previously delegated by the government to professional accounting bodies such as the ICAEW at a time when the Financial Reporting Council (FRC) was a small watchdog with much fewer resources.
But after corporate collapses at builder Carillion, retailer BHS and cafe chain Patisserie Valerie, the FRC is being bulked up into a more powerful regulator to improve auditing standards and take on a full suite of regulatory responsibilities.
“The proposal will bolster the Financial Reporting Council’s supervisory toolkit and enable it to become increasingly assertive in holding audit firms to account for the delivery of high-quality audits,” the FRC said in a statement.
“The FRC will be able to impose conditions, suspensions and remove registration where required.”
One of three government-backed reviews following the corporate collapses recommended in 2018 that the registration powers should be repatriated to the regulator.
The FRC said that it currently has insufficient powers to address systemic issues at auditors such as EY, KPMG, Deloitte and PwC — the so-called Big Four that audits the bulk of leading companies in Britain — and has to rely on the registration powers of the professional bodies.
The proposals are open to public consultation until May 26.
