AFRC enforcement in 2026: an emerging body of precedent

At the time of writing, the Accounting and Financial Reporting Council has published 16 disciplinary decisions in 2026. The decision concerning the audits of China Evergrande Group and related companies inevitably attracted the most attention. But what can be learnt from the 2026 decisions more broadly?

Perhaps the first observation is that there is no single theme. The cases concern a range of conduct and different parts of the accounting business. Rather than revealing particular areas of enforcement focus, they may be more usefully viewed as an emerging body of precedent on how the AFRC approaches different types of misconduct and, importantly, the sanctions that may follow.

A broad range of conduct

The decisions demonstrate the breadth of matters capable of attracting regulatory interest.

A number of the cases concern audit issues in specific engagements, including exercising professional scepticism and obtaining sufficient appropriate audit evidence. Others extend beyond individual engagements and concern broader matters, such as quality control and management, and compliance with legal requirements or regulatory guidelines.

The decisions published in 2026 have addressed, among other things:

• breaches of registration requirements for engagement partners and engagement quality control reviewers;
• failures in systems of quality control and management, including widespread and systemic failures to archive audit files on time;
• compliance with AML requirements when accepting engagements;
• failure to comply with statutory requirements to provide information and documents to the AFRC;
• auditor independence where services provided by a network firm overlapped with the subject matter of the audit;
• deficiencies in an assurance engagement concerning the liquid capital computation of an SFC-licensed corporation; and
• audit and assurance deficiencies in relation to occupational retirement schemes.

The lesson is therefore broader than ensuring that individual engagements withstand regulatory scrutiny. Regulatory risk can arise across the lifecycle of an engagement and at firm level, from engagement acceptance, independence and quality management to the performance and documentation of the work itself.

The significance of sanctions beyond fines

The 2026 decisions are also a reminder not to focus solely on headline financial penalties.

The AFRC has used a range of non-financial measures. Gary K. K. Leung & Co and its principal were prohibited for 12 months from carrying out audit or assurance engagements for SFC-licensed corporations, together with requirements concerning internal guidance and training. Most recently, Norton Rowland CPA Limited and its engagement director received 18-month practice limitations concerning specified MPF and occupational retirement scheme engagements.

For firms, the practical and commercial consequences of these measures can potentially be as important as the financial penalty itself.

The quality of cooperation

Another notable feature is the AFRC’s treatment of cooperation.

A number of the 2026 decisions record admissions, early resolution or settlement. The outcomes also illustrate that the credit given for cooperation may vary depending on the nature and quality of that cooperation. For example, Rongcheng and an individual regulatee received a 20% reduction rather than the maximum reduction because of inconsistent or contradictory responses. Grant Thornton received a 10% reduction where inaccurate data and information prolonged the investigation, whereas Forvis Mazars received a 30% reduction for cooperation.

The practical question for firms facing an investigation is therefore not simply whether to cooperate. It is how and when to engage effectively with the regulator, while assessing the position and the consequences of any admissions.

Where does this leave us?

It may be difficult to identify a single enforcement trend from the 2026 decisions. But that may itself be the more significant development. The decisions are building into a body of disciplinary precedent across an increasingly broad range of regulatory issues, providing greater visibility into both the AFRC’s expectations and its approach to sanctions.

For accounting firms, the practical takeaway is to look beyond the headline cases. Taken together, the decisions provide useful guidance on where regulatory risk can arise, how firms may engage with the regulator when issues arise, and the factors that may ultimately affect the sanctions imposed.