New audit firm governance code

07 June 2022
Auditing and Assurance
South African Accounting Academy

The new Code is a result of the findings of a monitoring programme undertaken by the FRC which identified scope to further strengthen its oversight and governance and to align the provisions of the Code with Operational Separation for the Big Four firms.

It separates the roles of the board chair and senior partner/chief executive, clarifies the role played by partnership boards in holding management to account and introduces criteria for board composition, reinforcing the position of independent non-executives within audit firms. For the largest audit firms, it sets out a clearer distinction between the role of Independent Non-Executives (INEs) and Audit Non-Executives (ANEs). The new Code also more closely aligns with the UK Corporate Governance Code, emphasising the importance of long-term sustainability, culture and employee engagement.

Code will strengthen independent oversight of the largest UK audit firms
Code applies to Big Four firms, FTSE-350 auditors, and auditors of a significant number of PIEs

Click here to access the Revised Governance Code:

https://www.frc.org.uk/news/april-2022-(1)/new-audit-firm-governance-code-published

Relevance to Auditors, Independent Reviewers & Accountants:

Code applies to Big Four firms, FTSE-350 auditors, and auditors of a significant number of PIEs.
The Audit Governance Code applies to the firm as a whole, not purely the audit practice. It continues to apply in its entirety in firms where the audit practice is operationally-separate from the rest of the firm.

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