“Fines against accountants more than doubled to a record £32m last year as the regulator cracked down on auditors in an attempt to repair its reputation in the wake of Carillion’s controversial collapse.
The penalties imposed mark a significant rise from the £13m in fines handed out by the Financial Reporting Council over the 2017-18 financial year.
The total would have reached £42.9m in the year to March 2019 if the FRC hadn’t offered discounts to firms that volunteered to settle cases early.
The rise in fines follows a series of accounting scandals at companies, such as Patisserie Valerie, which has put the work of auditors under heightened scrutiny and attracted criticism from politicians and regulators.
The accounting watchdog said the rise in penalties last year was partly due to more cases coming to a close over the period, as well as a rise in serious misconduct by accountants and the size of the auditing firms involved. The “big four” accounting firms – KPMG, Deloitte, PwC and EY – accounted for six of the nine fines imposed.
The big four have attracted heavy criticism over the quality of their audit work, particularly following the Carillion collapse.
Critics said KPMG should have spotted the construction firm’s problems sooner, and claimed auditors were prioritising profits over proper company scrutiny.
The FRC itself has been criticised for failing to keep close enough tabs on the industry, and is now set to be replaced with a new regulator.
The FRC’s executive counsel, Elizabeth Barrett, said: “The clarity and accuracy of financial reporting is of critical importance to us all. The significant increase in the number, range and severity of sanctions sends a clear message that where behaviour falls short of what is required, we will hold those responsible to account.”