Recommendation 7

HM Government · verbatim extract Not Addressed

10. BEIS agrees that the issues raised by the Committee are of public interest and merit investigation. As the Committee’s report states, the Financial Reporting Council (FRC) is the relevant public body. As they operate independently from Government, BEIS commends the following response shared by the FRC to the Committee: a) The FRC recognises the urgent public interest nature of this case, as noted by the Committee. b) The FRC investigates matters relating to the audits of: • Public Interest Entities (PIEs), i.e., listed entities, credit institutions and insurance undertakings; • AIM-listed companies with a market capitalisation in excess of €200m; and • Lloyd’s Syndicates. c) All other audit-related investigations are delegated to the Recognised Supervisory Bodies (RSBs), such as the Institute of Chartered Accountants for England and Wales (www.icaew.com). d) The GFG Alliance entities audited by King & King are not within the FRC’s usual scope of investigation. However, the FRC can reclaim a matter from an RSB where it is in the public interest to do so, with a view to investigation under its audit enforcement procedure (AEP) (www.frc.org.uk/auditors/enforcement- division/audit-enforcement-procedure). e) In determining how to respond to concerns about how an audit has been carried out, the FRC must follow the due process set out in the AEP. f) The FRC does not comment publicly on specific cases, other than as set out in the AEP, to avoid the risk of prejudicing any investigation or enforcement work that it might undertake. Government rejection of funding for Liberty Steel