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The FRC has announced the launch of the Scalebox initiative to assist smaller firms in conducting high-quality audits in the Public Interest Entity (PIE) market, which aims to promote competition and choice in the audit market.
According to the FRC, it recognises that smaller firms, or those new to the PIE market, “often face challenges in meeting regulatory expectations”.
As a result, the Scalebox will support firms in developing and maintaining audit quality as they grow or start out in the PIE audit market. It will also provide valuable insights from the FRC for firms that may come within the FRC’s scope for the first time.
The Scalebox will be overseen by a separate, independent team within the FRC’s Audit Firm Supervision (AFS) team. It will focus its work on areas where common findings occur, where requirements are changing or where firms need to focus as they grow.
The types of activities that the Scalebox may undertake include a review of aspects of completed audits to provide feedback on good practice and areas for improvement, as well as reviews of particular elements of a firm’s systems of quality control. The Scalebox will also review the firm’s actual or proposed governance process.
All firms currently in Tier Two and Tier Three for FRC Supervision purposes are eligible to join the Scalebox as well as firms intending to enter the PIE audit market.
Sarah Rapson, the FRC’s deputy chief executive and executive director of Supervision, said: “Today’s unveiling of the Scalebox means the FRC has another tool to use in our role as an improvement regulator and to promote competition and choice in the audit market.
“Through this approach to working with these firms, we hope to increase their audit capabilities and capacity as they enter the PIE audit market which will, over time, increase competition while maintaining high standards of audit quality.”
