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FRC sets out new strategic focus
10 October 2018
Does the consulting work undertaken by auditors compromise their independence? This is one of the key questions the FRC will be looking to answer with its new strategic review of audit.
The FRC said its wants to ensure audit serves the public interest and its new strategic programme will look at auditor independence, audit quality, the future needs of investors and corporate viability.
This ‘state of the nation’ review will determine whether further action is needed to prevent auditor independence being compromised, including if all consulting work for organisations they audit should be banned. The FRC stressed that public confidence in audit depends on confidence in the independence of auditors.
Taking lessons from recent company failures the FRC will develop proposals to strengthen requirements on auditors when considering if an organisation is a going concern. The FRC will be asking if the assessment of statements of long-term viability should be enhanced and whether auditors need to make these reports public.
FRC CEO Stephen Hadrill said: “This comprehensive reform programme addresses fundamental issues underlying falling trust in business and the effectiveness of audit, while also looking to ensure that the requirements on what companies say about themselves are fit for the future needs of stakeholders. If stakeholders are to have confidence in audit, they also need to have confidence in audit rules and regulations.”
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