Original recommendation

The Brydon Review recommended that directors should report on the actions they have taken to fulfil their obligations to prevent and detect material fraud against the background of their fraud risk assessment. (Source: Brydon 14.2.2)

Proposal

The Government proposes (Section 6.4) to legislate to require directors of Public Interest Entities to report on the steps they have taken to prevent and detect material fraud and believes that this will reinforce directors’ primary responsibility for fraud prevention and detection and may also, in some cases, enhance their focus on the risks relating to fraudulent financial reporting.

Government response

The Government intends to legislate to require directors of PIEs with more than 750 employees and an annual turnover of at least £750m to report on actions they have taken to prevent and detect fraud; auditor responsibilities will be unchanged whilst the regulator assesses recent changes made to relevant auditing standards.