CMA and Kingman confirm sea-change for the audit sector
The FRC has asked the firms to handover their policies and procedures for internal whistle-blowing, grievances, disciplinary matters and complaints from individuals outside the firm, by 30 August 2019. The stated aim is to help the FRC:
It has also stipulated that the documents the firms provide should specifically cover bullying and harassment, discrimination and alcohol/substance abuse policies, and has directed the firms to provide extracts from intranet pages which guide partners and staff on policy compliance, as well as Board reporting packs on these policies and procedures, where applicable.
The FRC explained to the firms that it wants to understand how firms deal with and respond to non-financial conduct, through the provision of internal documents and a new reporting requirement. In doing so they will assess how each firm’s policies and procedures are designed and whether they are effective in respect of non-financial conduct.
New quarterly reporting:
Existing reporting requirements:
The documents requested by the FRC together with the new reporting requirements will give the FRC insight into the effectiveness of the policies and procedures in dealing with and responding to non-financial (mis)conduct.
We may in the future then see the FRC introduce new guidance or other requirements on firms if it considers that the policies and procedures are ineffective and don’t meet best practice. This will particularly be so if the facts and figures which will come out of the reporting requirements demonstrate that the policies are ineffective, either from a preventative/educational aspect or from a responsive aspect. As is so often the case when a regulator conducts a thematic review such as this, we must sit and wait to find out what direction of travel any policy developments take after the results are in.
For further information on the issues raised in this blog post, please contact a member of our Regulatory team.
Sophie Bolzonello is a Associate (Australian Qualified) in the Regulatory department and specialises in advising regulated professionals on compliance, in investigations and in respect of enforcement action.
Associate (Foreign Qualified Lawyer)
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