PracticeAuditFRC: No level playing field for disciplining directors in audit cases

FRC: No level playing field for disciplining directors in audit cases

Stephen Haddrill hopes scope of powers to apply to all directors to even playing field

THE EU’s audit and regulation directive is likely to cause a discrepancy in the application of disciplinary measures taken against directors implicated in misconduct, according to the FRC.

In a speech given to the Grant Thornton Conference at the The Law Society in London this week, FRC chief executive Stephen Haddrill said he had hoped the government would widen the scope of the legislation to allow the body to hold all directors whose conduct fell below acceptable standards responsible, not simply those holding accountancy qualifications.

“That does not mean they will escape sanction as other regulators may act under company law or financial services legislation,” he said. “But the cases will be separate and the relative responsibilities of the different parties will not be fully tested in the same courtroom.”

He also raised the question of whether the FRC’s power to sanction directors who are members should be restricted to directors of public interest entities who have input in the preparation of financial statements.

“This would restrict the scope of the independent regulation and we believe will need careful consideration, not just within the profession but through public consultation,” he added.

“The new legislation is therefore not leading to a level playing field between professionals and directors and, indeed, it is hard to see how any legislation that relates to the roles of different individuals rather than to their actions could do so.”

He added the public expects high standards – or “moral courage” – from auditors than ever before, but warned that while the FRC is committed to a principles-based approach, it can “lead to more uncertainty when it comes to their enforcement, particularly as there is very little case law to aid interpretation”.

Related Articles

EY to audit Standard Chartered bank

Audit EY to audit Standard Chartered bank

2w Alia Shoaib, Reporter
KPMG replaces PwC as Croda auditor

Accounting Firms KPMG replaces PwC as Croda auditor

1m Emma Smith, Managing Editor
FRC closes investigation into PwC over Barclays compliance

Accounting Firms FRC closes investigation into PwC over Barclays compliance

2m Alia Shoaib, Reporter
PwC to audit BBC pay policies following gender pay gap outrage

Accounting Firms PwC to audit BBC pay policies following gender pay gap outrage

2m Alia Shoaib, Reporter
PwC to take over from Deloitte as Diploma auditor

Accounting Firms PwC to take over from Deloitte as Diploma auditor

3m Alia Shoaib, Reporter
KPMG rocked by South African corruption scandal

Audit KPMG rocked by South African corruption scandal

2m Alia Shoaib, Reporter
BDO replaces Deloitte as Mitie auditor

Audit BDO replaces Deloitte as Mitie auditor

2m Emma Smith, Managing Editor
FRC closes KPMG HBOS audit investigation, Treasury Committee expects ‘full explanation’

Accounting Firms FRC closes KPMG HBOS audit investigation, Treasury Committee expects ‘full explanation’

2m Emma Smith, Managing Editor