The FRC has confirmed its plan to scale back audit changes by taking forward under half of the original 18 proposals it set out in the consultation with its stakeholders.\r\n\r\nThe news comes after His Majesty\u2019s Speech to the Parliament did not prioritise the primary legislation to modernise the regulation of audit, corporate reporting and governance.\r\n\r\nDespite the move FRC stated that there is \u201cbroad stakeholder consensus\u201d that this reform continues to be \u201cnecessary to restore investor and public trust\u201d following the of several high-profile businesses including Carillion, BHS and Thomas Cook.\r\n\r\nThe FRC aims to enhance the quality of audit and corporate reporting and governance, whilst supporting the UK\u2019s economic growth and its international competitiveness and the government\u2019s broader ambition of making the UK \u201cthe best place in the world to start, grow and invest in a business\u201d.\r\n\r\nUnder the new revised code:\r\n\r\n \tThere will be a small number of changes that streamline and reduce duplication associated with the code that were overwhelmingly supported by stakeholders in the interests of reducing burdens.\r\n \tThe main substantive change the FRC will take forward concerns revisions to its original proposal on internal controls. The decision has been informed by \u201cvery helpful\u201d stakeholder feedback to ensure it ends up with a more targeted and proportionate code revision. This includes allowing more time for its implementation and ensuring the UK approach clearly differentiates from the much more intrusive approach adopted in the US.\r\n\r\nHowever, The FRC will not take forward the remainder, over half, of the original proposals. These include:\r\n\r\n \tThose relating to the role of audit committees on environmental and social governance and modifications to existing code provisions around diversity, over-boarding, and Committee Chairs engaging with shareholders.\r\n \tA number of other proposals as a result of the Government\u2019s recent decision to withdraw its Statutory Instrument relating to an audit and assurance policy, reporting on distributable profits and resilience statement requirements.\r\n\r\nIt intends to publish an updated code in January 2024. However, the FRC is conscious that some stakeholders have raised concerns about how its guidance issued under the code can have unintended effects on businesses, investors and their advisers.\r\n\r\nTo help tackle this, from January 2024, the FRC intends to give an additional remit to its Stakeholder Insight Group to provide the FRC with advice on whether there are aspects of its current and planned guidance associated with the code that could be improved to ensure the right balance is struck between supporting effective governance and reducing unnecessary burdens.\r\n\r\nThe group\u2019s membership consists of a mixture of investors, preparers, advisors and related membership bodies. It will report on this additional remit directly to the FRC CEO.\r\n\r\nRichard Moriarty, FRC CEO, said: \u201cOnce the updated UK Governance Code is issued in January 2024, we will as our next priority start to engage with stakeholders on how best to review the Stewardship Code, including understanding how it works in practice and what changes may be required going forward to ensure it remains fit for purpose. In doing so, we recognise the need to engage closely with other regulators who also have an interest in the operation of this Code.\u201d\r\n\r\nThe news comes after ICAEW criticised the exclusion of an audit and corporate governance reform bill from the King\u2019s Speech.