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FRC consults on revisions to the Audit Firm Governance Code

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31 Aug 2021

The Financial Reporting Council (FRC) has issued a consultation on proposals to update and strengthen significantly the UK’s Audit Firm Governance Code (“the Code”).

The proposals strengthen the Audit Firm Governance Code in key areas of accountability and firm resilience.  They refine the stated purpose of the Code, retaining a focus on promoting audit quality, while shifting the emphasis more squarely onto the public interest and reframing the third objective around audit firm resilience.  The proposals:

  • strengthen the Code in those areas where the FRC have identified gaps in the 2016 Code or weaknesses in firm implementation;
  • provide greater clarity in areas where stakeholders tell the FRC the 2016 Code is insufficiently precise or detailed;
  • reflect recent developments in good governance practice;
  • eliminate or reduce overlap with requirements based in law, regulation or standards;
  • align the Code with the language and intent of the new International Standards on Quality Management (UK); and
  • establish the boundaries between the responsibilities of independent non-executives (INEs) and Audit Non-Executives in firms with operationally-separate audit practices, currently the "Big Four".

Comments on the proposed changes are open until 18 November 2021. 

The press release and the full consultation are available on the FRC website.

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