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Conduct Committee Terms of reference

1. Role and responsibilities

1.1The Conduct Committee (Committee) has responsibility for:

  1. oversight of the FRC's enquiries, investigations and enforcement functions
  2. ensuring that appropriate cases are investigated
  3. ensuring that cases are conducted fairly, in the public interest, in a timely manner and in accordance with due process, and
  4. the matters set out in the schedule to these terms of reference.

1.2In addition to these terms of reference, members of the Committee must adhere to the General Committee Terms contained in the FRC Governance Handbook.

2. Membership

2.1The Committee shall have a majority of members who are not practising accountants, auditors and/or actuaries.

2.2No former audit partner shall serve as Chair of the Committee and no member shall be:

  1. a practising auditor or an individual who has during the previous five years1:
    1. carried out statutory audits;
    2. held voting rights in an auditing firm;
    3. been a member of an administrative management or supervisory body of an audit firm; or
    4. been a partner, employee or otherwise contracted by an audit firm;
  2. an officer or employee of any of the accountancy or actuarial professional bodies.

2.3Members of the Committee may not participate in any decisions relating to firms or companies for which they have worked in the previous ten years.

3. Meetings

3.1The Committee shall meet at least six times a year.

Schedule of responsibilities and delegated tasks

No. Responsibility Reference
1. Accountancy and Actuarial Schemes (Schemes)
1.1 Subject to a Board decision to reclaim any matter from the Committee or a decision of the Committee Chair to raise a matter to the Board, exercise the Board's powers under paragraph 3(iii) of the Schemes and the Board's functions and decisions under paragraphs 5, 6 and 7 of the Accountancy Scheme and paragraphs 5, 6, 7 and 8 of the Actuarial Scheme including those referenced below. Exercise the Board's powers under paragraph 3(iv) of the Schemes until 28 February 2026. Accountancy Scheme and Actuarial Scheme (Schemes), paragraph 3(v)
1.2 Exercise the functions and powers that are expressly ascribed to it under the Schemes. Schemes
1.3 Determine whether a Member or Member Firm2 is liable for investigation under the Schemes by applying the criteria at paragraph 5(1) and considering the factors at paragraphs 5(2) and 5(3) of the Schemes. Schemes, paragraphs 5(1) to (3)
1.4 If the Committee considers that it has insufficient information to determine liability to investigate, direct the FRC's Executive Counsel to make preliminary enquiries and inform the relevant Participant of that direction. Schemes, paragraphs 6(10)
1.5 Consider referrals from Participants regarding the potential Misconduct of a Member or Member Firm and determine whether to accept the referral. Schemes, paragraphs 6(3) and (4) and paragraphs 7(2) and (3)
1.6 Consider whether a matter relating to the conduct of a Member or Member Firm which may be the subject of an investigation by a Participant, or which the Committee may otherwise become aware of, meets the threshold for investigation by Executive Counsel and should be dealt with by the FRC in accordance with one of the Schemes. Schemes, paragraphs 6(8) and (9)
1.7 Determine the scope of investigations and any amendment thereto in accordance with the Schemes. Schemes, paragraphs 6(6), 7(8) and (9)
1.8 Authorise a Tribunal to employ any person whose services may reasonably be required to assist the Tribunal. Schemes, paragraph 3(iii)
2. Audit Enforcement Procedures (AEP)
2.1 Subject to a Board decision to reclaim any matter from the Committee or a decision of the Committee Chair to raise a matter to the Board, exercise the Board's powers and functions under the AEP including those referenced below. AEP, Rule 2
2.2 Consider information presented to it by the Case Examiner3 to determine whether:
  1. to direct the Case Examiner to attempt to resolve the matter(s) presented through Constructive Engagement,
  2. there is good reason to investigate matter(s) and, if so, to refer the matters presented to either the Executive Counsel or the relevant Recognised Supervisory Body (“RSB”) for investigation, or
  3. no further action is to be taken in relation to the matter(s).
 AEP, Rule 6 Guidance on the opening of investigations under the Audit Enforcement Procedure
2.3 Determine and amend the scope of investigations in accordance with the ΑΕΡ. AEP, Rules 9(a), 12 and 13
2.4 Where the Committee decides to open an investigation, send the Executive Counsel and Respondent(s) a Notice of Investigation (which will be copied to the relevant RSB) stating the scope of the investigation and whether the investigation has been delegated to a RSB. AEP, Rule 11
2.5 If relevant criteria have been met, decide whether to reconsider a previous decision of the Committee or Case Examiner to take no further action or to undertake Constructive Engagement. AEP, Part 8 (Rules 131 to 134)
3. Auditor Regulatory Sanctions Procedure (ARSP) and Crown Dependencies Recognised Auditor Sanctions Procedure (CDRASP)
3.1 Subject to a Board decision to reclaim any matter from the Committee or a decision of the Committee Chair to raise a matter to the Board, exercise the Board's responsibilities and decisions under paragraph 6.4 of the ARSP and CDRASP and to issue terms of reference for the Enforcement Committee as envisaged in those procedures. ARSP and CDRASP, paragraphs 2 (definition of Enforcement Committee), 3.1(d) and 6.4
3.2 Exercise the functions and powers that are expressly ascribed to it under the ARSP and CDRASP including those referenced below. ARSP and CDRASP
3.3 Receive reports from AQR where the Enforcement Committee Panel or Independent Sanctions Tribunal accepts written undertakings from a Recognised Auditor; and refer such matters to the Enforcement Committee ARSP, paragraph 8.5, 8.6 and 13.11 CDRASP, paragraph 8.5, 8.6 and 13.1
3.4 Panel Chair and Independent Sanctions Tribunal where there has been a failure to comply with the undertakings. In relation to matters referred to the Enforcement Committee Panel Chair, the Committee shall receive reports following the Enforcement Committee Panel's consideration of the matter. ARSP, paragraph 10.2 CDRASP, paragraph 10.2
3.5 Receive any final reports issued by the Enforcement Committee or Independent Sanctions Tribunal under the ARSP or CDRASP. In the case of Independent Sanctions Tribunal reports, the Committee shall send the report to the Registered/Recognised Auditor, relevant RSB and (in the case of the CDRASP) the relevant Registrar. ARSP, paragraph 13.6 and 13.7 CDRASP, paragraph 13.6 and 13.7
3.6 Make a direction to the relevant RSB requiring it to take the necessary steps to implement a sanction determined by the Independent Sanctions Tribunal; and where a sanction has been determined by the Independent Sanctions Tribunal, publish the determination of such sanction as soon as practicable and in such manner as it thinks fit unless, it would not, in the opinion of the Committee, be in the public interest. ARSP, paragraph 13.9, CD RASP paragraph 13.9
4. Auditor General Disciplinary Rules (AGDR)
4.1 Subject to a Board decision to reclaim any matter from the Committee or a decision of the Committee Chair to raise a matter to the Board, maintain and exercise the Board's powers, responsibilities and decisions under the AGDR. AGDR, Rule 29
4.2 Receive notifications when the Registrar determines that the conduct of the Auditor General shall be referred to an Investigating Committee. AGDR, Rule 4(3)
4.3 Constitute an Investigating Committee from members of the Enforcement Committee. AGDR, Rule 5
4.4 Receive notifications of the Investigation Committee's decisions and, if necessary, inform the Chair of the Public Accounts Commission of that decision. AGDR, Rule 9(2)
4.5 Approve the publication of information relating to Disciplinary Hearings and Orders, as required. AGDR, Rule 27
5. Disciplinary Procedures – General
5.1 Oversee the work of the Case Assessment Team, including receipt of regular updates on the nature and number of cases being opened and closed by the Case Examiner.
5.2 Review and approve budgets for investigations4 and enforcement action.
5.3 Direct Notices to be sent to Respondents / Members or Member Firms, Executive Counsel, the Convener and the relevant RSB / Participant as required.
5.4 Oversee the progress of investigations handled by the Enforcement Division against agreed internal milestones and published Key Performance Indicators.
5.5 Receive notifications as investigations progress, including of:
  1. decisions by Executive Counsel to close an investigation.
  2. the issuance of Settlement Agreements (under the Schemes)/Final Settlement Decision Notice or Final Decision Notices (under the AEΡ).
  3. the delivery of a Formal Complaint under the Schemes.
  4. the issuance of Disciplinary Tribunal Reports.
  5. the issuance of Notices of Appeal, and
  6. the Issuance of Appeal Tribunal Reports.
5.6 Receive reports from the relevant RSB on the progress of investigations which the Committee has directed are to be delegated to the RSBs.
5.7 Receive notification from the Case Examiner of any reclamation from an RSB of one or more delegated cases in respect of which the Case Examiner is assessing or has assessed whether the case(s) raise questions of breach(es) of Relevant Requirements. Clause 3.4(a) of the Delegation Agreements with RSBs.
5.8 Determine matters relating to enforcement announcements in accordance with the applicable enforcement procedures and publication policies. Including: Publication Policy (ΑΕΡ). SATCAR 2016, Publication Policy (Schemes).
5.9 Approve the removal – or any extensions to the default period for the publication - of outcomes in disciplinary matters on the FRC's website. Publication Policy (ΑΕΡ). Publication Policy (Schemes).
5.10 Commission internal reviews and public consultations on any proposed amendments to the Schemes, AEP, CDRASP, ARSP and AGDR.
5.11 Approve any amendments to the Schemes, AEP, CDRASP, ARSP and AGDR.
5.12 Approve amendments to sanctions Policies, Publication Policies and other guidance and policies in respect of the exercise of the FRC's Schemes, AΕΡ, CDRASP, ARSP and AGDR..
5.13 Approve amendments to the Enforcement Committee's Terms of Reference.
6. Other Responsibilities
6.1 Insofar as it relates to enforcement activity, advise the Board on the exercise of its functions as the designated Competent Authority under the Statutory Auditors and Third Country Auditors Regulations 2016 ("SATCAR 2016"). SATCAR 2016
6.2 Review, and make recommendations to the Board as to, any key publications (outside of those matters referenced at Item 5.8) relating to the FRC's investigations and enforcement activities, including the Annual Enforcement Review (or any successor report).
6.3 Receive updates on the activities of the Enforcement Division and the contribution of these activities to the objectives of the FRC.
6.4 Monitor the key risks in relation to the FRC's investigations and enforcement work.
6.5 Approve the appointment, reappointment or removal of the Tribunal's Secretary.

Approved by the FRC Board with effect from 1 November 2025

  1. Regulation 3(14) of SATCAR requires minimum period of three years since employment at a firm or a Recognised Supervisory Body ('RSB'). The Board has extended this to five years for Conduct Committee membership (non-Chair) to align it with its policy on staff involvement in matters relating to their former firms. ↩

  2. Defined terms used in the Schemes section of this schedule have the meanings given to them in the Schemes. ↩

  3. Defined terms used in the AEP section of this schedule have the meanings given to them in the AEP. ↩

  4. Following review from Senior Advisors in relation to investigation budgets. ↩

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Name Conduct Committee Terms of reference
Publication date 31 October 2025
Type Report
Format PDF, 776.9 KB
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