R/DV/RS via flickr
The reason for the development of new rules was several scandals, during which auditors were accused of poorly checking activities of certain companies. One of the largest cases was the situation around the British construction company Carillion in 2018 - then the audit companies were accused of overlooking the approaching collapse of the company.
Also, last year, the FRC began an investigation of EY’s activities after the bankruptcy of Thomas Cook, audited by EY. In recent weeks, the question of how well the Big Four players audited was raised in connection with the situation with Wirecard: an audit showed that the business of a German fintech company was unprofitable for many years.
The FRC requires that the audit companies prepare and submit their proposals for separation of audit units into a separate business, and this process should be completed by 2024. The regulator believes that this should reduce the impact on the auditors from the rest of the company and improve audit practices.
source: ft.com
Also, last year, the FRC began an investigation of EY’s activities after the bankruptcy of Thomas Cook, audited by EY. In recent weeks, the question of how well the Big Four players audited was raised in connection with the situation with Wirecard: an audit showed that the business of a German fintech company was unprofitable for many years.
The FRC requires that the audit companies prepare and submit their proposals for separation of audit units into a separate business, and this process should be completed by 2024. The regulator believes that this should reduce the impact on the auditors from the rest of the company and improve audit practices.
source: ft.com
