Earlier this year the FRC published an update to its Ethical Standard for auditors, effective from 15 December 2024.
The updated ethical standard
- simplifies the existing ethical standard and provided additional clarity in a limited number of areas.
- the new standard takes into account recent revisions made to the international IESBA Code of Ethics.
- there is a new targeted restriction on fees from entities related by a single controlling party.
Following feedback to their consultation, the FRC have amended the proposals to ensure that the requirements in the standard are better targeted and proportionate. For example, additional requirements in respect of ethical breach reporting by audit firms to the regulator have been removed. With regard to tax services provided to the controlling shareholders of unlisted companies the FRC is enhancing the independence risk assessment around these services rather than specifically prohibiting them.
Alongside the revised Ethical Standard, the FRC has also released guidance for auditors on the application of the Objective, Reasonable and Informed Third Party test, which forms a key part of many requirements in the Ethical Standard.
Read the updated Ethical Standard.
Read the feedback statement and impact statement.
CAI responded to the FRC consultation and you can read our response here.
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