Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Corporate Crime & Compliance UK newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360, London (December 7, 2020, 2:31 PM GMT ) The Financial Reporting Council has called on auditors to be on the alert for businesses that are wrongfully claiming financial support from the government during the COVID-19 pandemic.
The regulator has updated its guidance, which it published on Friday, to say it wants auditors to pay attention to the government's job retention scheme for employees as they go about their work. The audit watchdog warned that it could hand out fines to companies breaching the rules.
The program allows businesses in difficulties because of the pandemic to put their workers on furlough — or allow them leave of absence — and apply for a grant to cover part of their usual monthly wage costs.
"Improper claims for financial support, for example making claims under the Coronavirus Job Retention Scheme for employees said to be furloughed but who are actually working, could result in liabilities for repayment and fines," the watchdog said in its guidance.
The FRC said it wants auditors to take information about such conduct into account when they look at the risks that a business might make so-called material misstatements in its financial statements.
It is estimated that up to 10% of money taken from the government's furlough program was wrongfully paid out, Jim Harra, HM Revenue and Custom's chief executive, said in September. The £3.5 billion ($4.6 billion) could have been stolen by fraudsters or paid out in error, Harra said.
A government spokesman said in October that the U.K. does not plan to publish the names of businesses that received funds for COVID-19 relief after calls for more transparency in light of the billions paid out.
The FRC guidance is for auditors doing work that may be affected by COVID-19. Some audit companies face problems with getting their work done because of factors such as restrictions on movement or difficulty gaining access to a client's workplace, the regulator said.
The watchdog added that it has published the guidance because it does not want the pandemic to compromise the quality of audit work.
--Additional reporting by Molly Moses and Joseph Boris. Editing by Ed Harris.
For a reprint of this article, please contact reprints@law360.com.
