Research supports new standards for audit committees

New research by the Financial Reporting Council (FRC) has revealed the development of audit committee standards would support a more “consistent” approach to promoting audit quality.

Conducted by YouGov, the FRC’s research involved interviews with Audit Committee Chairs (ACCs) on how they operate in their role.

Data found ACCs placed particular emphasis on the audit tendering process to ensure a high-quality audit, as well as on challenging their auditor over how their planned audit approach would deliver quality.

Few ACCs referred to regularly challenging company management, as well as the auditors during the audit process.

Mark Babington, the FRC’s executive director of Regulatory Standards, said: “Audit committee chairs and audit committees have a vital role to play in ensuring high-quality audits are conducted in the public interest.

“Today’s research reveals there is a lack of consistency in how to approach audit quality with insufficient focus on the challenge of management and professional scepticism.”

He added: “Delivering high standards of audit, corporate governance and reporting remains a key focus for the FRC and we are working closely with the Government to take forward proposals that will better meet the needs of stakeholders and users of accounts.”