The ‘Audit Quality Framework’ was published in February 2008. The FRC hopes that the Framework will assist:

• Companies – in evaluating audit proposals;
• Audit Committees – in undertaking annual assessments of the effectiveness of external audits;
• All stakeholders – in evaluating the policies and actions taken by audit firms to ensure that high quality audits are performed, whether in the UK or overseas; and
• Regulators – when undertaking and reporting on their monitoring of the audit profession.

Recognising that audit quality is a dynamic concept and that the drivers and indicators of audit quality may change over time, the FRC stated that it will periodically update the Framework in light of comments received. Comments were invited by 30 June 2008 to support the first review; this press notice summaries the comments received.

There were 11 responses to the invitation to comment. The FRC believes that the responses will be of interest to others and has therefore, subject to agreement by the respondent, made them available on its website at http://www.frc.org.uk/about/promotingauditquality.cfm

Ten of the respondents welcomed the FRC’s efforts in facilitating communication between auditors, audit committees, investors and shareholders and gave general support to the framework. Three respondents believed it was too soon to be able to comment on the practical application of the Framework. These respondents, however, shared the view of others that the Framework should be re-visited in the future to ensure its relevancy and workability.

It is clear from the initial feedback received in response to the publication of the Framework that there is little appetite for any immediate changes to be made to it. However, two respondents have suggested that a change in the presentation of the drivers of audit quality may make them more user-friendly.

The FRC intends to next review the Framework in 18 months time. As well as considering the need for changes in the presentation of the drivers of audit quality, this will involve research into the use of the Framework by audit committees.

1. The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. It’s functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the FRC Board. The Committee on Corporate Governance assists the Board in its work on corporate governance.
2. All media enquiries should be addressed to Paul George, Director of Auditing, tel: 020 7492 2340 or email at: p.george@frc-pob.org.uk