Professional Oversight

The Professional Oversight team fulfils the following statutory responsibilities for the FRC:

• Ensuring that the FRC, as Competent Authority, may be satisfied that each Recognised Supervisory Body (‘RSB’) has the necessary arrangements in place to meet the requirements of the Delegation Agreement and should continue to be recognised as an RSB for the purpose of statutory audit;
• Independent oversight of the audit qualification awarded by the Recognised Qualifying Bodies (‘RQBs’) for the purpose of statutory audit;
• Independent supervision of Auditors General in respect of the exercise of their function as statutory auditors;
• Recognition of RSBs and RQBs for local audit purposes under the Local Audit and Accountability Act 2014.
• The regulation of auditors ("third country auditors") of companies outside the  European Economic Area that have issued securities admitted to trading on UK regulated markets; and
• The receipt of statutory change of auditor notifications from companies and statutory auditors in respect of public interest  companies;

​We report annually to the Secretary of State for Business, Innovation and Skills on the findings from this work.  Reports from 2013 onwards are included in the FRC’s annual report which can be found here.

By agreement with the Institute and Faculty of Actuaries (IFoA), the Professional Oversight team  exercises independent oversight of the regulation by the IFOA of its members.

By agreement with the chartered accountancy bodies, the Professional Oversight team exercises independent oversight of the regulation of the accountancy profession.

Recognised Supervisory Bodies (RSBs) are those professional accountancy bodies to which the FRC has delegated certain tasks concerning the regulation of statutory audit.

The requirements for recognition as a RSB are in Schedule 10 of the Companies Act 2006, as amended by SATCAR 2016.

There are currently four RSBs under Companies Act 2006:

• Association of Chartered Certified Accountants (ACCA)
• Chartered Accountants Ireland (CAI)
• Institute of Chartered Accountants in England and Wales (ICAEW)
• Institute of Chartered Accountants of Scotland (ICAS) 

The requirements for recognition under the The Local Audit and Accountability Act 2014 (LAAA) generally mirror the requirements under the Companies Act 2006. ICAEW and ICAS are recognised as RSBs for LAAA purposes.

Recognised Qualifying Bodies (RQBs) are those professional bodies who offer a recognised professional qualification for statutory auditors.

The requirements for recognition as an RQB are in Schedule 11 of the Companies Act 2006. 

There are currently six Recognised Qualifying Bodies (RQBs) under the Companies Act 2006:

• Association of Chartered Certified Accountants (ACCA)
• Association of International Accountants (AIA)
• Chartered Accountants Ireland (CAI)
• Chartered Institute of Public Finance and Accountancy (CIPFA)^{note 1}
• Institute of Chartered Accountants in England and Wales (ICAEW)
• Institute of Chartered Accountants of Scotland (ICAS)

Note 1:  CIPFA's status as an RQB is currently in abeyance.

The requirements for recognition under the The Local Audit and Accountability Act 2014 (LAAA) generally mirror the requirements under the Companies Act 2006. CIPFA are recognised as a RQB for LAAA purposes.

An accountant may offer a wide range of accountancy and related services (for example: accounts preparation, tax advice, payroll). However, only those accountants who are also registered as auditors are entitled by law to provide statutory audit services, most commonly the audit of limited companies.

Under The Statutory Auditors (Amendment of Companies Act 2006 and Delegation of Functions etc.) Order 2012, which replaced a previous delegation order, the Government delegated to the FRC most of the responsibilities and powers in Part 42 of the Companies Act 2006.

The delegated authority includes powers to make binding regulations in specific areas. See the FRC Regulations in force.

You should first pursue the matter with the relevant body, most of which also have a system of independent review or other process to consider the way they have handled a complaint. If you are not satisfied with the application of the process you can draw your concerns to the attention of the FRC’s Professional Oversight team.

Please submit all relevant documentation and correspondence to us setting out the details of your complaint. We may be unable to respond to your complaint if you do not provide to us information which we have reasonably requested.

Unless you explicitly state that you do not want the details of your complaint shared with the relevant professional body, we will normally notify them of the details of any complaint we receive so that we can investigate it fully.

All complaints about professional bodies should be submitted in writing to:

FRC - Professional Oversight Team
8th Floor,
125 London Wall
London
EC2Y 5AS
 

Alternatively you can email your complaint to oversight@frc.org.uk. Please ensure to include your contact address.

We aim to acknowledge all complaints within 10 working days of receipt. At this time we will notify you if your complaint does not fall within our remit. If a complaint does not fall within our remit, we will try and suggest organisations that may be able to assist with your complaint. We will also advise you if your complaint does not raise concerns that a professional accountancy or actuarial body has breached significantly its own standard procedures in the handling of your complaint about their member.

If your complaint raises concerns that a professional accountancy or actuarial body may have breached significantly its own standard procedures in the handling of your complaint about their member, we will normally seek the comments of the relevant body and look at papers relating to the case as appropriate. We will then normally write to you again to tell you the outcome of our consideration of the matter and whether the body proposes to take any action based on our comments. However, we do not have the power either to overturn any decision which the body has made in a case or to direct how the body should handle a case.

We may also use complaints put to us as part of our testing that the relevant body has appropriate systems for handling complaints and that these are working effectively in practice. We do not report the results of this work back to individual complainants. However, we report publicly each year to the Secretary of State on the overall results of our monitoring work in relation to the regulation of statutory audit and we may also publish other reports on specific aspects of our oversight work.

If we have considered and responded to your complaint, we will not usually enter into further correspondence with you on that matter unless you raise new issues that we consider to be relevant.

The Freedom of Information Act 2000 (the Act) was passed on 30 November 2000.  The Act:

1. gives a general right of access to information held by public authorities, subject to the exemptions set out in the Act
2. imposes an obligation on public authorities to produce and maintain a Publication Scheme approved by the Information Commissioner.  

The FRC is a public authority for part of its functions (see below).  

The FRC and the Act

The FRC is designated as a public authority under section 5 of the Act in relation to the FRC’s exercise of those statutory functions delegated to it under Part 42 Companies Act 2006 (section 1252(3)) and the exercise of the functions pursuant to its appointment as the Independent Supervisor (section 1228(3).

Sections 522 to 525 of the Companies Act 2006, as amended, set out the requirements on auditors and on companies to send statements and notices to the “appropriate audit authority” when an auditor ceases to hold office. 

In respect of an audit of a public interest company the appropriate audit authority is the FRC in its capacity as the Competent Authority. Both auditors and companies need to notify the “appropriate audit authority” and there are separate requirements placed on auditors and on companies by this legislation.  

Guidance on the circumstances in which the FRC is the appropriate audit authority, how the notification to the FRC should be made, and what it must cover is provided in the form of: 

• a flow chart for audit firms and
• a flow chart for companies

If you have queries in relation to this guidance, please email or phone Rory O'Brien on 020 7492 2372.

An auditor (individual or firm) must register with the FRC if it provides an audit report concerning the annual or consolidated accounts of a company incorporated outside the EU whose transferable securities, within the meaning of Article 4 (1) (18) of EU Directive 2004/39/EC, are admitted to trading on a regulated market, within the meaning of Article 4 (1) (14) of EU Directive 2004/39/EC, in the UK.

However, registration is not required if one of the following apply:

• The company is an issuer exclusively of debt securities, within the meaning of Article 2 (1) (b) of EU Directive 2004/109/EC, admitted to trading on or before to 31 December 2010, the denomination of which is at least €50,000 per unit or, in the case of debt securities denominated in another currency, equivalent, at the date of issue, to at least €50,000; or

• The company is an issuer exclusively of debt securities, within the meaning of Article 2 (1) (b) of EU Directive 2004/109/EC, admitted to trading after 31 December 2010, the denomination of which is at least €100,000 per unit or, in the case of debt securities denominated in another currency, equivalent, at the date of issue, to at least €100,000.

Pursuant to Article 45 (4) of EU Directive 2006/43/EC, an audit report of a relevant issuer that is signed by an auditor that is not registered with the FRC as a third country auditor has no legal effect in the UK.

The registration requirements differ depending on where the auditor is located. No registration is required under the current legal framework in the UK if the auditor is a registered auditor in the UK or is approved in accordance with the Statutory Audit Directive (as amended) by an EU Competent Authority to carry out audits of annual accounts or consolidated accounts required by EU law.

Further information can be found on the Third Country Auditors section of the FRC website.