Big Four accountants could face £10m fines for shoddy work
The country’s biggest beancounters face a raft of tougher sanctions.
Britain’s big four accountancy firms will face fines of up to £10 million as part of new regulatory powers aimed at clamping down on “seriously poor audit work”.
The Financial Reporting Council (FRC) said on Monday that it will implement the recommendations of a review of sanctions undertaken last year, with the country’s biggest beancounters facing a raft of tougher sanctions.
New rules governing auditors, accountants and actuaries will see rogue operators excluded from the profession for a minimum of 10 years for dishonesty, greater use by the FRC of non-financial penalties and the imposition of sanctions that “reflect the level of co-operation by respondents”.
The most stringent change is an increase in fines to “£10 million or more for seriously poor audit work by a Big 4 firm”.
KPMG, PwC, Deloitte and EY make up the four biggest accountancy firms in the UK.
The FRC’s largest financial sanction to date was when it fined PwC £5.1 million for misconduct in relation to the audit of RSM Tenon.
The changes comes amid mounting criticism of the FRC regarding its oversight of the accounting profession following the collapse of construction firm Carillion.
MPs savaged the big four and accused them of “feasting on the carcass” of Carillion by collecting more than £70 million in the decade before its demise.
Business Secretary Greg Clark last month called for the FRC to be subjected to an independent review.
He told a committee of MPs: “If you look back at the timeliness and record of some of the FRC’s investigations, I know that these two committees have been questioning whether it could have been more prompt and more rigorous.
“We should look at the operations of the FRC to see whether there are changes that are required – this should be done independently.”