FRC Consultation On Audit Committee Standard

• Published date: 22 November 2022
• Subject Matter: Accounting and Audit, Corporate/Commercial Law, Audit, Corporate and Company Law, Corporate Governance
• Law Firm: Herbert Smith Freehills
• Author: Ms Isobel Hoyle, Roddy Martin and Gareth Sykes

The Financial Reporting Council (FRC) has launched a consultation on a draft minimum Standard for audit committees of FTSE 350 companies in relation to external audit.

As part of the reform of audit and corporate governance in the UK, the government announced in May 2022 that it will give the Audit, Reporting and Governance Authority (ARGA) - the new successor regulator to the FRC - power to impose minimum requirements on audit committees of FTSE 350 companies in relation to the appointment and oversight of auditors. For more information on the audit and corporate governance reforms, see our updated briefing.

In anticipation of ARGA being given these powers by legislation, the FRC has published a draft minimum standard for consultation. The standard sets out the responsibilities of the audit committee in relation to the external audit, in particular with regard to the tendering process, the oversight of the external auditors and reporting to investors on these responsibilities in the annual report. The draft draws on...