Finance and Accountancy Briefing

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Accountancy update - FSA talks tough about auditors and actuaries


The FSA has entered the vigorous debate on the role of auditors and actuaries in the recent financial crisis. Although auditors escaped the blame during the immediate aftermath of the crisis, they are now facing severe scrutiny from regulators like the FSA.

Two of the Big Four accounting firms are under AADB investigation due to their role in FSA client asset audits. The FSA already has draconian powers, but it is seeking wider powers over accountants to enhance enforcement tools and improve regulatory compliance.

As a part of its armoury for upholding its statutory objectives, the FSA has the power to disqualify auditors and actuaries who fail to comply with a duty imposed on them under the Financial Services and Markets Act 2000 (FSMA).

The power granted by FSMA extends to disqualifying auditors in breach of duties imposed by the trust scheme rules. If an auditor or actuary provides a deficient report to the FSA, or fails to offer adequate assurance reporting on client assets, the FSA can disqualify the auditor or actuary from conducting such regulated work.

When deciding whether to exercise this power to disqualify and on the scope of any disqualification, the FSA must take into account such factors as the nature and seriousness of any breach of rules, the effect of that breach, the action taken by the auditor or actuary to remedy the breach, the action taken by other professional bodies, and the previous compliance record of the auditor or actuary.

For an in-depth look at the paper, please download it now.

Tags: Legal, Auditor, FSA, Regulations.

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