The Financial Reporting Council has today published its Second Progress Report on the implementation of the recommendations of the Markets Participants Group (MPG), the feedback to the consultation contained in the first Progress Report and other relevant developments.

Progress achieved in implementation of MPG recommendations following the May consultation includes:

• The revision of the FRC Guidance On Audit Committees (formerly known as “the Smith Guidance”);
• The publication for consultation by the ICAEW of the Combined Code style Best Practice Governance Guide for auditors of public interest entities, and
• The publication of an Exposure Draft by the Consultative Committee of Accountancy Bodies (CCAB) of a draft Voluntary Code of Practice on Disclosure of Audit Profitability.
  

Other relevant developments include a European Commission Recommendation on the limitation of the civil liability of auditors and a consultation on control structures in audit firms and their consequences on the audit market, and, in the US, publication of the Final Report of the Advisory Committee on the Auditing Profession.

Paul Boyle, Chief Executive of the FRC said:

“I am delighted with the progress that has been made in implementing the MPG recommendations, although the risks arising from the structure of the audit market remain significant. The FRC will continue to monitor the impact of the recommendations and consider the need for further action to reduce the risks.

I welcome the publication by the European Commission of a consultation paper on the ownership rules to audit firms which I believe will facilitate a debate which could have a positive impact on the market for audit services in the UK.”

1. The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance.
2. The FRC’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 Board. The Committee on Corporate Governance assists the Board in its work on corporate governance.
3. Press enquires should be directed to Paul George, Director of Auditing and Director, POB, on 0207 492 2340.