In the wake of numerous accounting scandals over the last two years, the Financial Reporting Council (FRC) – which oversees the accounting profession – is contemplating asking for tougher powers from the Government to set pay standards for auditors and focus management minds on the quality of the work they submit.

Since outsourcing firm Carillion and department chain store BHS were both given a clean bill of health by their auditors before they collapsed, something clearly needs to be done.

The FRC’s idea is to implement something along the same lines as the Senior Management Regime (SMR) which applies to the UK banking sector. Under the regime, senior managers can be held accountable if they do ‘significant harm’ to the business.

In the same way, if an audit firm’s work is considered to be below a certain standard, the FRC could demand that senior partners of the firm pay back some of their bonuses.

Earlier this year the Competition and Markets Authority (CMA) proposed an operational separation of the audit and consultancy businesses in order to address conflicts of interest.

Worries have since surfaced that the big firms could put in aggressively low bids for audit work simply in order to attract the more lucrative consultancy assignments.

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