The FRC published its fourth Annual Enforcement Review which reports a record number of cases resolved in the last year and record financial sanctions of £46.5m were imposed.

The increase in the total financial sanctions, up from £16.5m in 2020/21, reflects the seriousness and high number of cases concluded. It also reflects the FRC’s growing capability to take on the large and complex cases which are an increasingly prominent feature of its work, supported by a 23% growth in the Enforcement Division’s headcount.

The report also reveals that the increased focus on non-financial sanctions has continued. Non-financial sanctions, which are carefully tailored to the facts of each case, are becoming increasingly sophisticated with a focus on tackling the underlying causes of failure in order to reduce the risk of recurrence. The report emphasises the critical importance of detailed follow-up reporting so that the effectiveness of such sanctions can be closely monitored.

For the vast majority of concluded cases, a lack of audit evidence and a lack of professional scepticism featured - both of which go to the heart of robust audit.

The FRC continues to encourage and incentivise full and frank cooperation. While progress in this area has been slower than hoped, there have been some positive changes, including through self-reporting, comprehensive admissions and proactive steps to address the causes of matters self-reported.

Elizabeth Barrett, the FRC’s executive director of enforcement, said: “High-quality financial reporting and audit are vital to provide users of financial statements with confidence in the accuracy of those statements and to uphold trust in corporate Britain.

“The level of financial sanctions imposed in the year underscores the important dissuasive role they continue to play, while the further increase in the use of bespoke non-financial sanctions reflects the ongoing emphasis placed on identifying the underlying causes of failure and effecting long term positive change. Such sanctions play a key part in our role as an improvement regulator.”