The FRC is piloting an Audit and Assurance Lab project to explore the role of Audit Committee reporting in promoting audit quality. The project will commence in July 2017 and will explore how investors’ confidence in audit is enhanced by, and supported through:
the external reporting by audit committees in the annual report, in accordance with the UK Corporate Governance Code(Phase 1)1. This includes consideration of improvements that have been made in recent years; and
auditors’ reports to audit committees2, including how they can better support audit committee reporting (Phase 2).
The Phase 1 project report will be published in time for consideration for December 2017 year-ends. This will focus on the good practice elements of existing audit committee reporting, and encourage audit committees to consider adopting the practices if appropriate, in the context of their own reporting. The Phase 2 project report will be published in the first half of 2018.
The Audit and Assurance Lab seeks to promote best practice in a safe environment by engaging with stakeholders including audit committees, companies, investors, and auditors in a collaborative environment to understand their perspectives on an issue. It does not form part of policy, interpreting or monitoring requirements.
Guidelines for participants
All parties involved in the project are required to work collaboratively within the scope of the project, and respect the confidentiality of information provided by other participants as well as the project process and progress. This includes respecting the confidentiality of the names of audit committee members, companies, investors and auditors participating in the project, until such information is made public in the Audit and Assurance Lab’s report. It does not preclude obtaining additional input from other individuals within a participating organisation.
Participation also anticipates naming in the published report each participant, as an acknowledgement of contribution to the project. The reports generally do not attribute views to specific participants, and an advanced draft of the report is shared with participants to obtain their comments and confirm agreement for their organisation to be named.
During the project, the FRC may periodically provide public updates on the project. These are generally at a high level and also respect confidentiality of participants and their views.
For more information about the Phase 1 project please read or download this document (PDF).
We invite audit committee members, investors, companies and audit firms to indicate their interest in participating by 11 August via email at AuditandAssuranceLab@frc.org.uk.
1 Required by FRC Guidance for Audit Committees April 2016
2 In accordance with ISA (UK) 260 - Communication With Those Charged With Governance