Mark Beardsworth, Sharon Takhar & Nikara Rangesh assess how the Financial Reporting Council’s reforms will reshape relations between companies & their auditors
- The Financial Reporting Council’s audit enforcement reforms are likely to increase auditors’ demands for early access to internal investigations, creating risks around privilege, disclosure and regulatory strategy.
- Companies should establish robust privilege protocols, carefully control information shared with auditors and coordinate disclosure decisions from the outset.
On 1 July 2026, the Financial Reporting Council (FRC) introduced significant reforms to its Audit Enforcement Procedure (AEP)—the framework governing its enforcement action against auditors. The changes introduce new resolution pathways, raise the threshold for formal enforcement, and—critically for companies—alter the dynamics of information-sharing between auditors and audited entities at the earliest stages of any concern.
In practice, the reforms increase pressure on auditors to engage early with, and provide disclosures to, the FRC where compliance concerns arise—a risk that companies need to factor into their handling of potential misconduct. Companies should also expect auditors to seek more involvement in, and visibility
