FRC publishes minimum standard for audit committees
News types: Codes and Standards Announcements, Generic Announcement
Published: 22 May 2023
The Financial Reporting Council (FRC) has today announced the Audit Committees and the External Audit: Minimum Standard , which comes after careful consideration of the consultation responses received from stakeholders.
The consultation on the draft proposal for the Minimum Standard was launched by the FRC as a direct response to the Government's consultation on Restoring Trust in Audit and Corporate Governance, which expressed the intention to grant statutory powers to ARGA (Audit, Reporting and Governance Authority) for mandating minimum standards for audit committees in their role on external audits.
The primary objective of Standard is to enhance performance and ensure a consistent approach across audit committees within the FTSE350. By setting out clear expectations and guidelines, the FRC aims to support the delivery of high-quality audits and reinforce public trust in the financial reporting process. The standard will apply to FTSE350 companies.
Throughout the consultation period, the FRC received valuable feedback from a wide range of stakeholders, including prepares, investors, audit firms, accountancy bodies and members of the public. The responses were broadly supportive of the standard and have been summarised in the feedback statement .
In line with our commitment to transparency and collaboration, the standard is now available to audit committees on a voluntary basis, ahead of the anticipated legislation that will make compliance with the standard mandatory. This voluntary adoption period will allow audit committees to familiarise themselves with the requirements and proactively enhance their practices.
Mark Babington, Executive Director of regulatory Standards at the FRC, said:
The consultation on the draft proposal for the Minimum Standard was launched by the FRC as a direct response to the Government's consultation on Restoring Trust in Audit and Corporate Governance, which expressed the intention to grant statutory powers to ARGA (Audit, Reporting and Governance Authority) for mandating minimum standards for audit committees in their role on external audits.
The primary objective of Standard is to enhance performance and ensure a consistent approach across audit committees within the FTSE350. By setting out clear expectations and guidelines, the FRC aims to support the delivery of high-quality audits and reinforce public trust in the financial reporting process. The standard will apply to FTSE350 companies.
Throughout the consultation period, the FRC received valuable feedback from a wide range of stakeholders, including prepares, investors, audit firms, accountancy bodies and members of the public. The responses were broadly supportive of the standard and have been summarised in the feedback statement .
In line with our commitment to transparency and collaboration, the standard is now available to audit committees on a voluntary basis, ahead of the anticipated legislation that will make compliance with the standard mandatory. This voluntary adoption period will allow audit committees to familiarise themselves with the requirements and proactively enhance their practices.
Mark Babington, Executive Director of regulatory Standards at the FRC, said:
“The publication of the Audit Committees and the External Audit: Minimum Standard represents a milestone in our collective efforts to restore trust in the audit profession and promote effective corporate governance.
“We believe that the adoption of this standard will contribute to a stronger and more robust audit market.”