The UK’s Financial Reporting Council (FRC) has issued a consultation on revisions to the FRC’s Ethical Standard
to further enhance and clarify the principles of integrity, objectivity and independence auditors must abide by.
In the FRC’s 2022 position paper on audit market reform, the FRC committed to revising the Ethical Standard, and to consult at the same time about the withdrawal of the Other Entities of Public Interest (OEPI) category introduced in 2019. This is in light of the government’s proposed changes to the statutory Public Interest Entity (PIE) definition.
The proposed revisions to the Ethical Standard enhance prohibitions where an audit firm’s independence could be threatened by an economic over reliance on fees from specific entities that are connected. Other changes to prohibitions reflect relevant findings from audit inspections and enforcement cases.
Additional changes reflect significant developments in the International Ethics Standards Board for Accountants (IESBA) Code since the FRC last revised the Ethical Standard in 2019. These ensure that the UK’s Ethical Standard is no less stringent than the international code.
The new standard has also been revised to ensure breaches of ethical standards are reported to the FRC on a more timely basis.
The Irish Auditing & Accounting Supervisory Authority adopts auditing standards for use in Ireland under licence from the Financial Reporting Council in the United Kingdom. CPA Ireland will keep members updated on the impact on the ethical standards for auditors in Ireland.