News July 2016 Revised UK Audit Firm Governance Code sharpens purpose and enhances transparency

Revised UK Audit Firm Governance Code sharpens purpose and enhances transparency

27 July 2016

PN 45/16

The Financial Reporting Council (FRC) has today published a revised version of the UK Audit Firm Governance Code (PDF). Following consultation, the Code - which provides a benchmark of good governance practice against which firms that audit listed companies can report -  has been updated further to promote good governance of audit, align more with the UK Corporate Governance Code, enhance transparency and improve engagement between firms, investors and Independent Non-Executives.

Stephen Haddrill, FRC CEO, said:

“The UK Audit Firm Governance Code plays an integral role in enhancing justifiable trust and confidence in the value of audit among the public, particularly investors. The firms’ transparency reports need to reflect this by including content that is of greater relevance to stakeholders.

We have clarified the purpose of the Code in the promotion of audit quality; helping secure the reputation of firms more broadly, including their non-audit businesses; and reducing the risk of firm failure. New provisions also promote greater transparency of reporting to all stakeholders including on the firms’ viability. We look for strong governance in all the firms that are covered by the Code in support of their public interest responsibilities for delivering quality audits.”

The FRC will conduct regular reviews of transparency reports to highlight best practice and innovation in governance. It will consider the extent to which firms are adopting provisions from the UK Corporate Governance Code and assess whether there is scope for their future incorporation into the Audit Firm Governance Code.

Read or download the Feedback Statement: Review of the UK Audit Firm Governance Code (PDF)
 Notes to editors:

1.    The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We are the UK competent authority for audit and set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing.  We operate independent enforcement arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.