THE FRC has issued a consultation on the provisions of the Audit Firm Governance Code, further to its review earlier this year.
The proposed changes reflect a number of key messages from investors and other respondents to the earlier consultation. They include clarification of code’s purpose – namely that its primary goal should lie in audit quality, but good governance should also be promoted across the firms as a whole.
Feedback also revealed that the role of independent non-executives was important but could be further strengthened. Additionally, investors said they wanted to hear more from NEDs directly about their work and views on the firms’ performance on audit.
Firms should also consider adopting provisions of the Corporate Governance Code not currently in the Audit Firm Governance Code, while continuing to maintain and grow the efforts they have built to engage with investors.
FRC CEO, Stephen Haddrill said: “The audit firm governance code has led to an enhancement in governance of the major firms who have put significant effort into adopting its key provisions.
“Above all it creates, through the independent non-executives, an independent voice and challenge at the heart of the firms, which is of particular importance in view of their public interest responsibilities. The proposed new provisions will strengthen this voice further, provide clarity about the code’s purpose particularly in relation to audit quality and encourage further transparency to investors.”
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