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The FRC has launched a new consultation on revisions to its Ethical Standard in a bid to “enhance and clarify the principles of integrity, objectivity and independence” for auditors.
The proposed revisions reportedly aim to enhance prohibitions where an audit firm’s independence could be “threatened” by an economic over-reliance on fees from specific entities. Other changes to prohibitions are said to reflect findings from audit inspections and enforcement cases.
The FRC said that other changes reflect “significant” developments in the International Ethics Standards Board for Accountants (IESBA) Code since it last revised the Ethical Standard in 2019, ensuring the UK’s Ethical Standard is “no less stringent” than the international code.
The new standard has also been revised to ensure breaches of ethical standards are reported to the FRC on a more timely basis.
In its 2022 position paper on audit market reform, the FRC committed to revising the standard whilst consulting about the withdrawal of the Other Entities of Public Interest (OEPI) category, which had been introduced in 2019.
The FRC’s executive director of Regulatory Standards, Mark Babington said: “High standards of ethical behaviour go to the heart of high-quality audit and are designed to ensure auditors act with independence, objectivity and integrity at all times.
“While many of these proposed changes reflect developments at the international level, additional enhancements have also been introduced to ensure the ethical requirements are clearly understood and abided by so that there can be no uncertainty of the standards expected.”
