In the context of the consultation on non-audit services currently being undertaken by the Auditing Practices Board (‘APB’) and recent public comment concerning the additional services, described as internal audit services or extended assurance services, that some auditors provide in conjunction with an audit, the FRC has written to the larger audit firms to advise them of steps it intends to take to review current market practice.

Paul Boyle, Chief Executive of the FRC commented:

"The FRC believes it is important that audit firms and their clients should be aware of the steps being taken and may want to be cautious before entering into arrangements which stretch the internal/external audit boundary, not least because it could prove to be inconvenient and/or costly to change such arrangements should the outcome of the FRC’s work be that the Ethical Standards are changed in a way that affects the provision of such services. “

The FRC APB intends to take the following steps:

1. The APB and the Audit Inspection Unit of the Professional Oversight Board ('POB')will work with the profession to understand the precise scope of those engagements that involve the provision of additional services in conjunction with an audit, including those described as extended assurance services;
2. Over the next three months, the APB will seek the views of stakeholders on the implications of auditors providing such services to their audit clients so that those views are available to it when considering the responses it gets to its Consultation Paper on non-audit services generally;
    
3. With the benefit of the information obtained the APB and the POB will determine whether such engagements, or similarly constructed packages of services, comply with the principles underlying the APB's current Ethical Standards; and
    
4. In the light of the information obtained and the conclusions reached, the APB will consider whether the principles on which it's Ethical Standards relating to such matters require reinforcement and, if so, in what way the provisions of its Ethical Standards need to be amended.

1. The Financial Reporting Council (FRC), the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. Its 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 press enquiries should be directed to: Paul Boyle on Tel: 020 7492 2390 or Paul George on 020 7492 2340.