The Case Examination and Enquiries team co-ordinates enquiries into matters of concern affecting public interest entities and other matters of public interest. Each enquiry is individually scoped, but will typically utilise a team of specialists from different teams across the FRC and may include:
- A review of all publicly available information
- A technical review of the financial statements for the relevant period(s)
- A review of certain aspects of the audit files for the relevant period(s)
- Discussions with other regulators and law enforcement bodies as applicable
- To the extent possible, discussions with the relevant parties
- Preparation of a report, which if applicable, will be presented to the Conduct Committee
- Consideration of what further information or work is required, if any
Examples of situations which may merit such an enquiry include the following:
- A major corporate collapse or near collapse shortly after the release of the company’s annual report
- A major fraud
- A significant restatement in the financial statements
- Widespread concerns over the quality of reporting or governance on a particular issue
The Case Examiner
A significant part of the work of the team encompasses the role of the Case Examiner, whose responsibilities are set out in the FRC's Audit Enforcement Procedure. The Case Examiner is required, on receipt of information about a statutory auditor, to determine whether there is a question that an auditor or audit firm may have breached a relevant requirement, and if appropriate, refer the matter to the Conduct Committee to take a decision on whether to commence an investigation under the Audit Enforcement Procedure.
For more minor breaches the Case Examiner may decide to enter into constructive engagement with the audit firm to ensure that any breaches have been adequately addressed.
The Conduct Committee
is responsible for considering the results of an enquiry and determining the appropriate outcome, for example:
- Deciding to commence a formal investigation under the Audit Enforcement Procedure or the disciplinary schemes.
- Inviting the CRR Committee and/or the AQR Committee to proceed in accordance with their respective normal procedures governing the monitoring of corporate reports and audits.
- Publication of a report of the enquiry’s findings.
- A recommendation for an issue to be considered by the relevant part of the Corporate Governance & Reporting division.
- Referral to another regulatory, law enforcement body or professional body.
- No further action.