FRC updates 'Our Approach to Audit Supervision'

News types: Publications

Published: 31 March 2023

The Financial Reporting Council (FRC) has today updated its Our Approach to Audit Supervision document, outlining how it supervises audit firms.

Reflected in the updated document are significant additions to the FRC’s supervision approach that have been established over the last two years. These include the introduction of a Public Interest Entities Auditor Registration, Supervisor letters, and Single Quality Plans.

The FRC has also taken on the role of shadow system leader for local audit, highlighting its commitment to ensuring high-quality audits in both the public and corporate sectors.

At the heart of the FRC's approach are three teams within the Supervision Division: Audit Firm Supervision, Audit Market Supervision, and Audit Quality Review. These teams are dedicated to promoting audit quality and fostering resilience among firms.

Sarah Rapson, Deputy Chief Executive and Executive Director  of Supervision at the FRC, said:

"The FRC’s supervisory activity is not only in the best interest of audit firms but also in the public interest, and we believe that fair, proportionate and assertive engagement with firms is critical to protecting that interest.

“The key to our approach is balance, and as an improvement regulator we employ the "four faces" approach to regulation. As a System partner and Facilitator, we are focused on improving standards and practices. As a Supervisor and Enforcer, we ensure that these standards are being effectively applied and hold accountable those who fail to meet them when it is in the public interest.

"We are confident that the approach outlined in this publication will continue to support the highest standards of audit quality in the United Kingdom, and we look forward to working with the audit community to achieve this goal.”

The update to Our Approach to Audit Supervision underscores the FRC's commitment to promoting high-quality audit and working with audit firms to ensure that the public can have confidence in the information provided in financial reports and accounts.

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