The FRC is the independent disciplinary body for accountants and accountancy firms, and operates a disciplinary scheme for the accountancy profession. The Accountancy Scheme operates independently of the professional bodies. Its scope is now limited following the introduction of the Audit Enforcement Procedure, to cover all statutory audit matters, in June 2016.
The most recent version of the Accountancy Scheme was effective from 8 December 2014. On this page we set out:
Scope of the Accountancy Scheme
The Accountancy Scheme covers Members and Member Firms of the following professional bodies:
Institute of Chartered Accountants in England and Wales (ICAEW)
Chartered Institute of Management Accountants (CIMA)
Chartered Institute of Public Finance and Accountancy (CIPFA)
Institute of Chartered Accountants in Ireland (ICAI)
Association of Chartered Certified Accountants (ACCA)
Institute of Chartered Accountants of Scotland (ICAS)
The FRC will commence an investigation into a Member or a Member Firm if:
The decision to investigate is made by the Conduct Committee. Public interest considerations as to whether to take on an investigation include (but is not limited to):
the impact on a significant number of people in the UK;
the loss / potential loss of significant sums of money;
whether the conduct undermines confidence in financial reporting or corporate governance in the UK.
Outline of the Accountancy Scheme
The Accountancy Scheme and Accountancy Regulations contain the detailed rules which govern how cases are dealt with by the FRC. We have set out a summary of the key stages below:
1. Initial enquiries / Referral: The FRC can start a disciplinary investigation in one of two ways:
- a referral from a professional body; or
- an investigation of its own accord. These cases are identified by the Case Examination and Enquiries team.
In each case, the FRC’s Conduct Committee will decide whether the criteria for an investigation is met. If it is, the Conduct Committee will refer the case to the Executive Counsel and the Enforcement Division will conduct an investigation. The Conduct Committee will also decide whether the fact of an investigation should be published.
the Executive Counsel’s investigation will be conducted by an in-house team of lawyers and forensic accountants, usually culminating in an Investigation Report. Executive Counsel may also instruct an external expert to provide an expert opinion and engage external Counsel to advise on the merits of the case. The investigation will be overseen by a Case Management Committee.
3. Proposed Formal Complaint:
At the conclusion of the investigation, the Executive Counsel will deliver a Proposed Formal Complaint if he considers that:
- there is a realistic prospect that a Disciplinary Tribunal will make an Adverse Finding against a Member or Member Firm; and a hearing is desirable in the public interest.
- If Executive Counsel considers that any of these two limbs is not met, the process will end there.
4. Representations: Once a Proposed Formal Complaint has been served, the proposed Respondent(s) will have 8 weeks to make any representations.
5. Formal Complaint: If, having reviewed any representations and Executive Counsel remains of the view that:
- there is a realistic prospect that a Disciplinary Tribunal will make an Adverse Finding against a Member or Member Firm; and
- a hearing is desirable in the public interest,
then Executive Counsel will deliver a Formal complaint against the relevant Member or Member Firm.
A Disciplinary Tribunal will be appointed to hear the Formal Complaint. At a hearing, the Disciplinary Tribunal will either make an Adverse Finding in respect of part or all of the alleged Misconduct, or dismiss the Formal Complaint. Where an Adverse Finding has been made against a Member or a Member Firm, a Disciplinary Tribunal may impose a sanction.
At any stage after the commencement of an investigation but prior to any final determination of the Formal Complaint, Executive Counsel may enter into settlement discussions with a Member or a Member Firm in respect of a part or the whole of any alleged Misconduct.