FRC publishes revised Third Country Auditor directions

News types:

Published: 15 July 2026

The Financial Reporting Council (FRC) has issued revised Third Country Auditor (TCA) directions to temporarily enable audits of Chinese-registered entities, listing Global Depositary Receipts (GDRs) on the Shanghai/Shenzhen Stock Connect (Stock Connect) segment of the London Stock Exchange (Stock Connect Audits), to be undertaken in accordance with Chinese Standards on Auditing (CSAs). The revised TCA directions will apply from 1 September 2026.

The FRC consulted earlier in 2026 seeking views on the proposed amendments. This followed a request from the UK Government for the FRC to consider whether a temporary amendment to the FRC’s TCA could address current barriers to Chinese issuers of GDRs listing on Stock Connect, while ensuring that the FRC’s statutory responsibilities for audit quality and investor protection continue to be met.

The FRC’s decision to proceed with the revised TCA [1] is made on the basis that TCAs undertaking Stock Connect Audits in accordance with CSAs will be required to make appropriate disclosures so that investors can assess the risks around the use of CSAs.

In addition to issuing the revised TCA directions, the FRC will:

  1. require TCAs conducting Stock Connect Audits to both disclose in their audit report the use of CSAs, and include a statement that CSAs have not been assessed by the FRC as equivalent to International Standards on Auditing (ISAs);
  2. inform the Financial Conduct Authority that the FRC considers the use of CSAs for Stock Connect Audits to be a material matter, and accordingly, would expect issuers to make appropriate public disclosures to the market regarding their use; and
  3. engage with the London Stock Exchange Group to explore whether additional clarity can be provided on their website (and other channels) to identify for investors which issuers are listed on Stock Connect, and the use of CSAs in Stock Connect Audits.

Read the Revised Third Country Auditor Register Procedures

Read the Third Country Auditor Registration Consultation Feedback Statement

Read Registration of Third Country Auditors

Footnotes

  1. [1]

    The revised directions are made pursuant to powers in sections 1239(7) and 1242(4) of Companies 2006 Act, which have been delegated to the FRC by the Statutory Auditors (Amendment of Companies Act 2006 and Delegation of Functions etc.) Order 2012 (SI 2012/1741).