FRC says quarter of inquiries still ‘too slow’

While the FRC concluded a record amount of investigations over the past year, it has admitted that a quarter of cases are still taking longer than it would like, The Times has reported.

While the authority said its ongoing commitment to “timely” enforcement actions was reflected in year-on-year improvements in the published KPI over the last five years, 25% of cases failed to meet the KPI in 2022/23.

It comes as the FRC closed 19 inquiries between June 2022 and May 2023, 12 of which resulted in sanctions for offending auditors. 

Overall, PwC had the most cases completed at five, including investigations into its work on the audits of BT and Babcock. UHY Hacker Young, Deloitte and KPMG were also sanctioned.

The FRC yesterday (27 July) revealed that a record number of cases were resolved in the year 2022/23, resulting in financial sanctions of £40.5m being imposed, according to the council’s Annual Enforcement Review.

The FRC’s highest ever sanction of £20m was imposed in a case which “underscores the seriousness of providing deliberately misleading information” to the FRC’s inspections team.  

Elizabeth Barrett, executive director of enforcement at the FRC, said: “The record number of cases concluded this year reflects the strengthened capability and determination of the FRC to hold firms and individuals to account for serious accounting and audit failures.

“Timeliness has been a key priority over the last five years and significant ongoing improvements in this area are recorded in this year’s review.” 

She added: “While higher financial sanctions are an important marker of the seriousness of the failings, non-financial sanctions continue to play a key role in driving improved behaviour and outcomes to deliver long-term positive change.”