FRC urged to keep guidance up to date and monitor emerging issues
ACCA, the world’s leading global accountancy body, is broadly supportive of the UK’s update to ethical standards (ES) for auditors to align with international best practice. However, it notes the need for clarification and additional guidance.
ACCA says that the Financial Reporting Council’s (FRC’s) revised and updated ethical standards reflects the significant developments in the International Ethics Standards Board got Accountants (IESBA) Code since FRC’s last revision in 2019.
ACCA suggests an impact assessment to assess which entities will be excluded as a result of the removal of the OEPI (other entities of public interest) category and to determine the significance of this categorisation change. ACCA considers that the removal of the OEPI classification would simplify the ethical requirements for auditors, improve compliance and reduce uncertainty around the application of the ethical requirements.
ACCA agrees with the enhanced prohibition where an audit firm’s independence could be threatened by an economic over reliance on fees from specific connected entities.
Mike Suffield, Director, Policy and Insights, said: ‘Economic over reliance could impair objectivity and independence giving rise to self-interest and intimidation threats. This prohibition will be a step forward in renewing public confidence in the quality of audits.’
If implemented the extension of restrictions on the provision of non-audit or additional services will align the FRC’s standard more closely with international standards.
ACCA continues to support FRC’s effort to simplify the standard but also called on the FRC to ensure it updates the standard as often as necessary to keep up to date with IESBA changes, and additional guidance outside of the ES is provided to facilitate consistent application.
Jessica Bingham, ACCA’s regional policy and insights lead for UK & EEMA, said: ‘We recommend that the FRC continues to conduct regular reviews of any breach reporting trends to ensure the identification of areas where further guidance could be provided.’
Read ACCA's submission
–Ends–
For media enquiries, contact:
ACCA News Room
E: newsroom@accaglobal.com
Twitter: @ACCANews
accaglobal.com
About ACCA
We are ACCA (the Association of Chartered Certified Accountants), a globally recognised professional accountancy body providing qualifications and advancing standards in accountancy worldwide.
Founded in 1904 to widen access to the accountancy profession, we’ve long championed inclusion and today proudly support a diverse community of over 247,000 members and 526,000 future members in 181 countries.
Our forward-looking qualifications, continuous learning and insights are respected and valued by employers in every sector. They equip individuals with the business and finance expertise and ethical judgment to create, protect, and report the sustainable value delivered by organisations and economies.
Guided by our purpose and values, our vision is to develop the accountancy profession the world needs. Partnering with policymakers, standard setters, the donor community, educators and other accountancy bodies, we’re strengthening and building a profession that drives a sustainable future for all.
Find out more at: www.accaglobal.com