The UK’s Financial Reporting Council (FRC) has updated its Practice Aid to assist audit committees in evaluating audit quality in their assessment of the effectiveness of the external audit process.
The update takes into account developments since the first edition was issued in 2015 which includes revisions of the UK corporate Governance Code and the requirement for all Public Interest Entities (PIEs) to conduct a tender at least every 10 years and rotate auditors after at least 20 years.
New sections have been added to the Practice Aid which address the audit tender process and matters to cover in audit committee reporting.
It sets out practical suggestions on how audit committees might tailor their evaluation in the context of the company’s model and strategy, the business risks it faces, and the perception of the reasonable expectations of the company’s investors and other stakeholders.
The FRC is encouraging audit committees to use the practice aid to help develop their own approach to their evaluation of audit quality.