The FRC has confirmed it set out the regulator’s expectations for operational separation to bring about “audit quality improvements and audit market resilience”.
According to Sky News, in the letter the FRC reportedly told the firms they must set up separate boards for the audit and consultancy work with the audit board having an independent chairman.
Claire Lindridge, the FRC’s director of audit firm monitoring and supervision (AFMAS), said:
“The FRC’s focus is to ensure audit firms put audit quality front and centre, with new independence and financial transparency guidelines to support this.
“We expect the firms to put in place independent governance for the audit practice and ensure that the audit practice Is appropriately ring fenced from the rest of the firm so that financial results are clear and transparent.”