Companies Act 2014 section 1646

System of investigation and penalties

Section 1646 requires recognised accountancy bodies to establish systems for investigating and penalising inadequate sustainability reporting assurance work, and sets out the sanctions available including powers of the Supervisory Authority.

• Each recognised accountancy body must set up effective systems to detect, correct and prevent inadequate sustainability reporting assurance work by the auditors and audit firms it oversees.
• Recognised accountancy bodies cannot impose penalties on auditors or audit firms of public-interest entities for relevant contraventions relating to those entities — such cases fall to the Supervisory Authority.
• Available penalties include withdrawal of approval or registration, temporary prohibition from carrying out assurance work, and declarations under the Audit Directive.
• The Supervisory Authority may declare that an assurance report does not meet requirements and may ban an auditor or key sustainability partner from carrying out assurance work or signing assurance reports for a specified or indefinite period.