Regulatory Referral
Definition
A direction from an external oversight body such as the US Securities and Exchange Commission, the UK Financial Conduct Authority, India's Serious Fraud Investigation Office, or the EU's OLAF to investigate specific allegations. Regulatory referrals typically carry legal force, defined timelines, and mandatory disclosure obligations.
- Example bodies
- SEC (US), FCA (UK), SFIO (India), OLAF (EU)
- Legal weight
- Typically carries legal force
- Features
- Defined timelines and mandatory disclosure obligations
Common questions
How does a regulatory referral differ from an internally initiated forensic accounting engagement?+
A regulatory referral originates from a body with statutory authority and typically imposes a fixed timeline and mandatory disclosure requirements that an internal review does not carry, which changes how the engagement is scoped, documented, and reported compared to work commissioned by the organisation itself.
Can a forensic accountant decline a regulatory referral once issued?+
The organisation under investigation generally cannot refuse to cooperate once a regulator with statutory authority issues a referral, though the specific obligations and any right to challenge scope depend on the regulator's jurisdiction and the applicable law in that country.
Related terms
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- Engagement Trigger
- The event, report, or observation that initiates a forensic audit engagement. Common triggers include whistleblower reports, regulatory referrals, audit anomalies, and management...
- Predication
- The reasonable basis that justifies opening a fraud examination. The ACFE holds that no examination should begin without adequate predication, meaning a...
- Referral Pathway
- The institutional or personal channel through which the trigger reaches the forensic auditor. Pathways include the audit committee, internal audit, external auditor,...
- Whistleblower
- An individual, typically an employee or former employee, who reports suspected misconduct to an internal hotline, audit committee, regulator, or law enforcement...