UK’s Audit Watchdog Plans a Makeover

The UK’s Financial Reporting Council (FRC) is hitting pause on business as usual. After years of complaints from accounting firms about endless investigations and stress overload, it’s now reviewing how it handles misconduct cases.

What’s changing?

The FRC says it’ll run a full “end-to-end” review of its investigation process — from how cases start to how results get published. The goal? To maybe avoid launching full-blown probes in every case and use smarter, more flexible tools instead.

But don’t worry: proper investigations will still be part of the game. The move just reflects a new mindset after scandals like Carillion and BHS forced the regulator to get tough on audit failures (think £48.2mn in fines last year alone).

Why the rethink?

Because some probes are taking forever. Nearly half of them drag on for more than two years — and that’s left firms frustrated, with top partners stuck in limbo.

Even Alan Vallance, boss of the UK’s top accountancy institute, says three years is “a really long time” and it’s time to rethink the whole system.

Shift in focus

FRC chief Richard Moriarty now wants to focus less on singling out individual auditors and more on how firms as a whole manage quality. He’s also calling for a more “nuanced” approach, since not every company collapse is automatically an auditor’s fault.

What’s next?

The FRC already floated the idea last December. This autumn, it’ll open a full consultation to shape the future of audit regulation. So stay tuned — audit drama, but make it reform.