The FRC said that by setting out clear expectations and guidelines, it aims to support the delivery of high-quality audits and reinforce public trust in the financial reporting process
The Financial Reporting Council (FRC) has unveiled a new minimum standard for audit, which aims to “enhance performance and ensure a consistent approach” across audit committees within the FTSE350.
The FRC said that by setting out clear expectations and guidelines, it aims to support the delivery of high-quality audits and reinforce public trust in the financial reporting process.
The publication of the Audit Committees and the External Audit: Minimum Standard comes after “careful consideration” of consultation responses received from stakeholders.
A 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.
This consultation had 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.
Throughout the consultation period, the FRC received 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, it said.
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. The FRC added 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.
Writes Heather Sandlin in Accountancy Today