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Enforcement Committee Panel

The Chair of the Enforcement Committee Panel shall appoint members to an Enforcement Committee.

An Enforcement Committee is required to undertake functions under Parts 4 and 6 of the Audit Enforcement Procedure in relation to a particular allegation or to undertake functions under Part 3 of the Auditor Regulatory Sanctions Procedure or Part 3 of the Crown Dependencies Recognised Auditor Regulatory Sanctions Procedure in relation to an alleged failure to comply with the Regulatory Framework.

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1. Membership

The Board shall appoint the Chair of the Enforcement Committee Panel who shall be legally qualified. The Conduct Committee shall appoint up to 9 other members of the Enforcement Committee Panel ("the Panel").

The persons who may be appointed to the Panel shall include, but not be limited to, persons having legal and auditing expertise and experience.

No member of the Panel shall be:
(a) a member of the Conduct Committee,  the Case Management Committee or the Tribunal and Appeal Panel appointed under the FRC’s Audit Enforcement Procedure;
(b) a serving officer of any of the Recognised Supervisory Bodies;
(c) a current employee, member, director or officer of the FRC or subsidiary company of the FRC; or
(d)  a practising auditor or an individual who has during the previous 3 years:
(i)  carried out statutory audits;
(ii)  held voting rights in an auditing firm;
(iii)  been a member of an administrative management or supervisory body of an audit firm;
(iv) been a partner, employee, or otherwise contracted by an audit firm;
(v)  been an employee, member, director or officer of the FRC, any subsidiary company of the FRC or any Recognised Supervisory Body.

Members appointed to the Panel will be appointed for terms of up to 3 years and may be reappointed for two further three year periods.

2. Appointment of Enforcement Committee from the Panel

The Chair of the Enforcement Committee Panel, having regard to the matters to be considered and the availability, experience and expertise of Panel members, may appoint an Enforcement Committee from the Panel.

An Enforcement Committee shall comprise 3 members of the Panel including a legally qualified Chair to undertake functions under Parts 4 and 6 of the Audit Enforcement Procedure in relation to a particular allegation or to undertake functions under Part 3 of the Auditor Regulatory Sanctions Procedure or Part 3 of the Crown Dependencies Recognised Auditor Regulatory Sanctions Procedure in relation to an alleged failure to comply with the Regulatory Framework.
 
An Enforcement Committee must comprise, in addition to the Chair:
(a)  a person who is neither a lawyer nor an individual with audit experience;
(b)  an individual with audit experience.

No member appointed to an Enforcement Committee to consider an interim order under Part 6 of the Audit Enforcement Procedure can be appointed to an Enforcement Committee considering the allegation under Part 4.

All matters considered by the Enforcement Committee shall remain confidential to that Committee subject to the reporting responsibilities and to applicable publication provisions and Publication Policies.

3. Quorum

The quorum for an Enforcement Committee shall be 3 Committee members.
 

4. Meetings

The Enforcement Committee meets in private and may not hear oral evidence but may, in accordance with Rule 22(c) Enforcement Procedure, invite Executive Counsel and the Respondent to attend to make oral submissions.

Only members of the Enforcement Committee appointed by the Chair shall have the right to attend meetings of that Committee. However, other individuals may be invited to attend all or part of any Enforcement Committee meeting as and when appropriate.
 

5. Voting

Matters are decided by majority vote and no member of the Committee may abstain from a vote.  The Chair does not have the casting vote.
 

6. Responsibilities of the Enforcement Committee

The Enforcement Committee shall exercise its functions in accordance with Parts 4 and 6 of the Audit Enforcement Procedure including:

  • considering all the documentation and representations placed before it by Executive Counsel and the Respondent;

  • specifying time limits and grant extension to the parties;

  • adjourning for further enquiries of the parties to be conducted as considered necessary;

  • inviting the Executive Counsel and the Respondent to attend to make oral submissions;

  • deciding whether a Respondent is liable for Enforcement Action and issuing a notice of cancellation pursuant to Rule 75 or a Decision Notice as applicable;

  • when issuing a Decision Notice, providing reasons for its findings and proposed Sanction (see guidance in respect of Decision Making and Giving Reasons); 

  • through the Chair, when the Respondent has rejected all or part of the Decision Notice or has failed to respond within the specified time, determining whether to refer the matter to the Tribunal or to issue a Final Decision Notice;

  • in interim orders cases, considering submissions from the Parties and deciding whether to impose an Interim Order.

  • The Enforcement Committee shall exercise its functions in accordance with Part 3 of the Auditor Regulatory Sanctions Procedure or Part 3 of the Crown Dependencies Recognised Auditor Regulatory Sanctions Procedure including:

  • considering all the documentation and representations placed before it by Audit Quality Review team (AQR) and the Registered or Recognised Auditor;

  • deciding whether the Registered or Recognised Auditor is liable to a sanction under the Procedure and if so, proposing a sanction for agreement;

  • when issuing a notice of proposed sanction, providing reasons for its findings and proposed sanction; 

  • considering representations in response to a notice of proposed sanction and determining whether to take no further action, confirm or vary the proposed sanction or accept written undertakings from the Registered Auditor;

  • directing the Recognised Supervisory Body of which the Registered or Recognised Auditor is a member to take the necessary steps to impose the sanction;

  • publishing details of the sanction;

  • sending notice to the Registered or Recognised Auditor that the matter is referred to the Independent Sanctions Tribunal.

In undertaking its responsibilities, any Enforcement Committee will have regard to the guidance issued by the Conduct Committee.
 

7. Reporting Responsibilities

The Enforcement Committee Panel Chair shall provide an annual report to the Conduct Committee which will include trends, patterns and learning points observed from the cases considered. 
 

8. Other

The Enforcement Committee Panel shall have access to sufficient resources and is authorised to seek information from the FRC executive in order to carry out its responsibilities.
 
Approved by the FRC Board with effect from 17 June 2016

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