FRC updates UK auditing standards

The Financial Reporting Council (FRC) has updated several key auditing standards covering reporting, fraud and going concern. The revisions aim to simplify audit reporting, improve transparency and align UK standards with international requirements.

These changes apply to audits of financial statements for periods commencing on or after 15 December 2026. 

What's changing in audit reporting

Audit reports have become longer and more complex over time. Feedback suggests this has not always made them more useful or easier for stakeholders to understand, particularly for smaller and less complex entities.

Following a public consultation, the FRC has revised ISAs (UK) 700, 701 and 720 to address some of those concerns by amending some reporting requirements that had crept in over time. 

The broad objectives of the proposed changes were to: 

• Simplify and declutter the auditor’s report and reduce reporting burdens). 
• Increase the quantity of useful information for users within the auditor’s report. 
• Ensure UK auditing standards remain aligned with international standards. 

In practice, the FRC’s work in this area has led to the following key changes to ISA (UK) 700 - Forming an Opinion and Reporting on Financial Statements: 

• Most audit reports will no longer require commentary on the extent to which the audit was considered capable of detecting irregularities, including fraud. This requirement will now be restricted to audits where ISA 701 is in scope (ie those which require the communication of ‘Key Audit Matters’ such as listed entities and those that choose to follow the UK Corporate Governance Code). 
• Reporting of matters by exception has been streamlined to reflect a truer ‘exceptions’ basis. As a result, the audit report won’t need to describe the auditor's responsibilities for such matters in cases where exceptions don’t arise.  
• More information on ‘auditors responsibilities’ will be hosted on the FRC’s website, so audit report commentary on this can be reduced. 

The FRC has also updated ISAs (UK) 701 and 720. These changes principally affect entities that apply the UK Corporate Governance Code. Firms with audit clients in that category should refer to the FRC’s guidance for more information.  

These changes to audit reporting requirements are effective for audits of financial statements for periods commencing on or after 15 December 2026. 

Changes to the fraud and going concern auditing standards

On 30 April, the FRC published the final revisions to two key UK auditing standards addressing auditors’ responsibilities in relation to fraud and going concern.  

Fraud 

The UK standard was last revised in 2021, following the near collapse of Patisserie Valerie. In 2025, the IIASB (International Internal Audit Standards Board) revised the international version of the standard. The revised standards aim to:

• Reinforce the exercise of professional scepticism throughout the performance of the audit. 
• Clarify and emphasise auditor responsibilities. 
• Strengthen ongoing communication throughout the audit with management and those charged with governance about matters related to fraud. 
• Apply a fraud lens on risk identification and assessment. 
• Add robust work effort requirements when fraud or suspected fraud is identified. 
• Enhance transparency on key audit matters related to fraud in the Auditor’s report. 
• Enhance audit documentation requirements. 

The result is a range of changes to the international standard relating to these broader themes and aims.

Given the revisions, many of the UK ISA ‘pluses’ - brought in by the FRC in 2021 - are now adequately reflected within the revised international standard itself. They will no longer be required to be ‘added’ to the UK version of the standard. 

However, there are a still a range of areas where the UK version of the standard will include additions similar to the extant version, such as: 

• Requirements under ISA (UK) 250 Section A and Section B to respond to identified or suspected instances of non-compliance with laws and regulations. 
• Prohibition of “tipping-off” the entity under anti-money laundering legislation. 
• The need to inquire with those charged with governance regarding risks specific to the entity’s business sector. 

Going concern 

Similar to the fraud standard the UK version of ISA 570 was last revised in 2019, again following some high-profile company (and audit) failures – this time including Carillion.

At that time, the UK standard introduced some substantive differences to the international version, including: 

• A more robust framework of requirements to assess the risk of going concern in an entity and to evaluate management’s assessment of going concern. 
• The fostering of an appropriately independent and challenging mindset in the auditor when assessing and challenging management’s assessment of going concern. 
• The provision of greater transparency and insight into the audit process through enhanced auditor reporting on going concern. 

The IAASB has revised the international version of ISA 570 to bring in many of the revisions made to the UK standard in 2019. However, like ISA 240, there are still a few key areas where the UK version of the standard will contain ‘UK pluses’ to ensure consistency with the current UK requirements. For example, the UK version of the revised standard will retain: 

• The existing requirement to consider whether any additional facts or information has become available since the date on which management made its assessment. 
• Some existing additional requirements relating to entities that report on how they have applied the UK Corporate Governance Code and certain other large private and quoted companies. 

When will the changes come into effect?

These changes are effective for audits of financial statements for periods commencing on or after 15 December 2026. However, firms should still begin planning appropriate training in due course. 

Further information is available in the consultation documents on the FRC’s website.