By Huw Jones
LONDON (Reuters) – Britain’s auditing regulator will propose as soon as later this week to strengthen its ability to punish poorly performing auditors of publicly listed companies, a person familiar with the matter said on Monday.
The Financial Reporting Council (FRC) is due to propose “reclaiming” authorisation powers over audit firms such as EY, KPMG, Deloitte and PwC and their audit partners that were delegated to the accounting industry’s professional bodies.
The government wants to create a stronger accounting watchdog to raise standards of audit after corporate collapses at Carillion, BHS and elsewhere.
“It would mean more powers in terms of putting conditions on registrations of auditors, or removing them from certain sectors,” the person said.
A review chaired by John Kingman in 2018 said it was a serious deficiency that powers to approve the registration of audit firms and their partners had been delegated to professional bodies, and that these powers should be “reclaimed” by the FRC.
The government has yet to set out legislation to implement recommendations from Kingman and two other reviews aimed at raising auditing standards, though plans for draft legislation could be announced next month by the government for a new session of parliament.
As registration powers already exist, they can be reclaimed by the FRC without the need for a new law.
The Financial Times first reported on the FRC’s planned proposals.
(Reporting by Huw Jones; Editing by Alex Richardson)
