Our Expectations

As part of our focus on leadership and governance we have set out, below, our expectations of the experience, skills and attributes of candidates for the key roles of Independent Non-Executives1, Head of UK firm, Chair, Head of Audit and Ethics Partner at the Big Six firms. In a pre-appointment meeting we will assess and feed back to senior management of the firm how well we believe their appointees meet these criteria.

When requesting a pre-appointment meeting:

For candidates for all roles, details should be provided of:

  1. How the appointment was agreed, including details of any discussions at governing body level.

  2. How the candidate is considered competent and capable to carry out the role.

  3. The candidate’s understanding of the firm’s values and audit specific values, in particular:

    • Integrity, objectivity, professional competence and due care, confidentiality and professional behaviour, as set out in the Audit Firm Governance Code.

    • Integrity, objectivity and independence, as set out in the Ethical Standard.

  4. How the appointment complements the firm’s strategy.

In addition, for the individuals proposed for the roles of Head of Audit, Ethics Partner and Head of UK firm details of any complaints made against the candidate by clients or former clients in the last five years, which the candidate has accepted, or which are awaiting determination, should be disclosed to the FRC.

When considering appointments, we will take account of the following characteristics:

Independent non-executives

  • Knowledge of professional services firms (or an induction plan in place to address gaps)
  • An understanding of the public interest and its importance to the activities of an audit firm
  • Ability to command the respect of the firm’s partners
  • Sufficient time to devote to the role

At least one INE should have competence in accounting and/or auditing.

Head of UK firm

  • If from an audit background - evidence of involvement in audit quality initiatives within the firm in recent years
  • If from a non-audit background – consideration of how the individual will support audit quality within the firm as Head of UK firm
  • Sufficient time (outside of their portfolio of fee earning work) to devote to the role

Chair

  • Consideration of how the individual will support audit quality within the firm as Chair
  • An understanding of the public interest and its importance to the activities of an audit firm
  • Sufficient time (outside of their portfolio of fee earning work) to devote to the role

Head of audit

  • Track record of audit quality (from internal and/or external reviews)
  • Evidence of involvement in audit quality initiatives within the firm in recent years
  • Sufficient time (outside of their portfolio of audit work) to devote to the role 

Ethics Partner

  • Track record of involvement in ethical matters/issues within the firm
  • An independent attitude of mind
  • Evidence of sufficient standing within the firm to uphold difficult decisions
  • Sufficient time (outside of their portfolio of fee earning work) to devote to the role

 

1 The role of INEs is considered in detail in the Audit Firm Governance Code (https://www.frc.org.uk/getattachment/8e2026c0-cac0-4faa-8326-4713511f139a/Audit-Firm-Governance-Code-July-2016.pdf)
 

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