FRC to introduce ‘prohibitions’ to UK governance code to prevent conflicts
Latest FRC UK Corporate Governance Code update further restricts auditors in bid to minimise conflict of interest
THE FRC is to introduce measures to further curb potential conflicts of interest facing auditors in its latest update to the UK Corporate Governance Code.
The final draft includes changes to strengthen auditor independence by applying prohibitions to a range of engagements that could result in an auditor facing a conflict of interest.
The announcement forms part of the EU’s audit reforms, which are intended to open the FTSE 350 market up to more audit firms such as Grant Thornton and BDO, among others.
Central to those reforms are mandatory tendering and rotation of auditors every ten years.
FRC executive director for audit Melanie Mclaren (pictured) said: “The updates to the code, guidance and standards implement a significant change in audit regulation in the UK which will be overseen by the FRC as a competent authority with the support of the accountancy professional bodies.
“The changes will support further innovation by the audit profession in the UK, and ensure that auditors act in a way that is genuinely independent and seen to be in the public interest. The UK has led the way on promoting audit transparency and competition on quality so that investors can have confidence in corporate reporting.”