LONDON • The world's Big Four accounting firms will face potential fines of £10 million (S$18.5 million) or more for serious rule breaches from June, double the record penalty to date.
The Financial Reporting Council (FRC) said yesterday that it has accepted the findings of a study last November by former judge Christopher Clarke, which recommended much bigger fines for serious misdeeds by the world's biggest accountants.
Larger fines are part of the FRC's push to bolster its credibility after being heavily criticised by lawmakers for being too slow to take on the big accountants caught up in company scandals.
Under the FRC's disciplinary procedure, it sets out a case against an auditor or individual accountant at an independent tribunal before asking the tribunal to set a fine at a specific level. The record amount agreed by a tribunal so far is £5.1 million for PwC over its audit of RSM Tenon.
Mr Clarke recommended an increase in fines to £10 million or more for seriously poor audit work from a Big Four accounting firm, meaning PwC, KPMG, EY and Deloitte, which check the books of most international blue-chip firms. The FRC also accepted recommendations to make greater use of non-financial penalties and to exclude dishonest auditors from the accounting profession for at least 10 years.
But fines will be discounted in line with the level of cooperation during a probe to encourage early settlement, the FRC said.