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Enhanced monitoring proposed
11 April 2018
The FRC has announced plans to enhance its monitoring of the six largest audit firms to avoid systematic deficiencies with firmsí networks, disruption in the provision of statutory audit services, and instability in the financial sector.
The FRC said it will set out its expectations of each audit firm and use evidence it gains to inform its supervision programme for these firms.
The accountancy watchdog will focus its attention on five key pillars that are critical to the stability of the audit firms and quality of audit work.
*Leadership & governance.
*Values & behaviours.
*Business models & financial soundness.
*Risk management & control.
*Evidence on audit quality, including from the FRCís annual programme of audit quality reviews.
The FRC revealed that it has begun work on monitoring risk reporting, contingency planning and IT security at audit firms, and will report to the firms on its findings on all five pillars. The results of the FRCís inspection of audit quality by the firms will be published in firm-specific reports in June and summarised in the annual Developments in Audit report in July.
The FRCís Melanie McLaren said: ďThe work of the Big 6 audit firms is core to the integrity and transparency of UK capital markets and so it is vital that the FRC introduces a new approach to monitoring their stability and performance by focussing on aspects of their businesses that are critical to the provision of high quality audit.Ē
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