Enforcing Compliance with Accounting Standards: The Role of the Financial Reporting Review Panel in the UK Regulatory Framework

A new regulatory regime for issuing, and enforcing compliance with, accounting standards has been established in the UK. It includes an enforcement body, the Financial Reporting Review Panel (FRRP), which is responsible for examining alleged departures from the Companies Act and accounting standards by companies. The FRRP has secured revisions in company accounts which were regarded as defective, and has issued press notices summarising the defects and the remedial action taken. The FRRP was intended to strengthen auditors in their negotiations with directors, but there are tensions in the relationship as the majority of companies receiving a press notice had unqualified audit reports. The FRRP has reported auditors to their professional body, but no action has been taken against any auditors to date.