Future Audit Supervision Strategy: FRC launches second phase of engagement
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Published: 13 August 2025
The Financial Reporting Council (FRC) has today published a discussion paper and launched the next phase of engagement on its Future of Audit Supervision Strategy (FASS), which aims to evolve its supervisory approach to support an environment that promotes a resilient audit market and enables firms of all sizes to deliver high-quality while driving accountability, and improvement.
A robust and proportionate supervisory approach is essential to ensure a sustainable, well-functioning audit market, and audit profession. This is fundamental to maintaining the UK’s status as a leading global destination to build and scale a business.
Following the feedback the FRC received from stakeholders in its early engagement on FASS, it has developed a set of proposals on which it is seeking views from stakeholders. The proposed supervisory approach is centred on the ambition to drive confidence for investors, businesses, and the public while being more effective and proportionate.
The key proposals include:
- Adapting the future supervisory approach to take account of the effectiveness of the Systems of Quality Management of audit firms
- Developing the approach to graded file inspections and its impact to reflect a firm’s audit portfolio and role in the market
- Introducing a transition period during which the FRC will reduce the inspection work that it performs on the International Standard of Quality Management (UK) 1 for the 12 largest Public Interest Entity audit firms
- Removing the current tiering structure to avoid labels for groups of firms in the FRC’s reporting
- Proportionately applying the supervisory approach across the whole market, by both the FRC and the Recognised Supervisory Bodies
- Developing the reporting model for the audit market to ensure reporting continues to provide value for investors, users of financial statements (such as pensioners, employees, and creditors), businesses and the public.
This phase of engagement invites responses to the questions set out in this document by 30 September 2025, and the FRC will be holding a series of roundtables online and in-person on the following dates
- 11 September for Auditors
- 15 September for Auditors
- 17 September for Independent and Audit Non-Executives of audit firms
- 18 September for users of audit, including Audit Committee Chairs and investors
- 22 September for Recognised Supervisory Bodies
- 25 September for Auditors
If you are interested in attending these events, please register your interest by using this form: Expression of Interest: Roundtables on the Future of Audit Supervision Strategy (FASS). Please submit any written responses to: [email protected].
Listen to our podcast on how the FRC's supervisory approach will evolve.