FRC strengthens audit quality with revised standards on assessing risks associated with non-compliance with laws and regulations
News types: Codes and Standards Announcements
Published: 29 October 2026
The Financial Reporting Council (FRC) has revised two auditing standards to strengthen audit quality through a clearer and more effective risk-based approach when considering whether there is a risk of material misstatement as a result of non-compliance with laws and regulations by entities.
The FRC has published:
- ISA (UK) 250 Revised Consideration of Laws and Regulations in an Audit of Financial Statements
- ISA (UK) 270 Special Considerations for Audits of Public Interest Entities – Communicating and Reporting to an Appropriate Authority Outside the Entity
These standards, which the FRC consulted on in spring 2026, are risk based and, as a result, more scalable than the existing procedural standards, supporting the application of professional judgement rather than being checklist in nature.
The revisions also improve the interaction between ISA (UK) 250, ISA (UK) 270, and the audit risk assessment framework established by ISA (UK) 315, as well as help auditors to address UK legislative developments including the Economic Crime and Corporate Transparency Act 2023.
In response to feedback received from stakeholders during the consultation process, the FRC has enhanced the application material throughout both standards to provide clearer implementation guidance, reinforce proportionality and scalability, and reduce the risk of inconsistent interpretation or over-implementation.
The FRC has also published a mythbuster document to address some of the most common questions and concerns which arose during the consultation.
These revised standards will be effective for audits of financial statements for periods beginning on or after 15 December 2027. The FRC will continue engaging with stakeholders in the run up to this effective date to support the consistent and proportionate implementation of the standards.
Read the revised standards: ISA (UK) 250 and ISA (UK) 270