FRC updates quality management standards for audit firms

The Financial Reporting Council (FRC) has issued revised quality management standards for an audit firm’s responsibilities to design, implement and operate a system of quality management.

This includes a revision of the International Standard on Quality Management (UK) 1, which covers the quality management of firms that perform audits or reviews of financial statements.

Furthermore, the FRC confirmed revisions of the International Standard on Quality Management (UK) 2 and International Standard on Auditing (UK) 220 (Revised July 2021).

In a statement, the regulator said: “These standards introduce a new quality management approach that is focused on proactively identifying and responding to risks to quality.

“This new approach requires a firm to customise the design, implementation and operation of its system of quality management based on the nature and circumstances of the firm, using an integrated approach that reflects upon the quality management system as a whole.”

It added: “The standards are effective for audits of financial statements for periods beginning on or after 15 December 2022. Early adoption of the revised standards is strongly encouraged.”