Fines for auditor misconduct issued by the Financial Reporting Council rose by almost 50% in 2019.
The firm said the jump “reflects the FRC’s hardening approach in the light of recent criticism of the FRC and of auditors”.
These findings follow a recent increase in the size of the FRC’s enforcement team, as well as a revision of sanction tactics in 2018 that “encouraged tougher sanctions”.
The 2016 EU Audit Regulation also allowed the FRC more jurisdiction to cover a broader range of audits.
Following three independent reviews commissioned in 2018, the FRC is set to transform into a new regulatory body known as the Auditing, Reporting and Governance Authority (ARGA). In March 2019, the government announced it backed the proposal of this transformation.
Robert Morris, partner at RPC, said: “Whilst the FRC has been accused of lacking teeth, fines are of the scale where they are now causing real financial pain.
“We are getting to the point where the FRC and its successor may want to be cautious about increasing the level of fines even further.”
He added: “We are now seeing the impact of the regulatory changes that have been introduced over the last few years, which have given the FRC far more power to fine firms.
“There could be heavier sanctions on the horizon following the recent Queen’s Speech, which said it would develop a ‘stronger regulator with all the powers necessary to reform the sector.
“The new regulator, ARGA, must ensure that its sanctions are fair and do not discourage firms from taking on work.”