FRC doing their best to keep audit reform momentum going
The Financial Reporting Council (“FRC”), the regulator responsible for UK auditing and corporate reporting and soon to become the Auditing Reporting and Governance Authority (or ARGA), are doing their best to keep the audit and governance reform momentum going, despite BEIS dragging their feet and going back on some reform suggestions. Part of this is the FRC’s proposed revisions to their Audit Firm Governance Code (“AFGC” or the “Code”), giving their expectations of how relevant audit firms operate and are governed:
- To promote audit quality.
- To ensure firms take account of the public interest in their decision-making, particularly in audit.
- To safeguard the sustainability and resilience of audit practices and of firms as a whole.
We have now replied to their consultation on their proposed revisions to the AFGC and our key messages were:
- Support for their tightening up the Code
- A need for them to define audit quality and provide guidance on how it should be measured
- Suggesting we (individual shareholders) would like more engagement with audit firms and their independent non executives (“INEs”) but intermediation (nominee accounts) are a barrier
- We (individual shareholders) need to be involved or represented by organisations like UKSA in the dialogue between companies, their audit committees, auditors and shareholders.