FRC announces plan to register auditors of public interest entities
The Financial Reporting Council (FRC) has launched a consultation to take responsibility for the registration of auditors of public interest entities (PIEs) from the recognised supervisory bodies (RSBs).
Sir John Kingman’s review of the FRC recommended that it should undertake the approval and registration of audit firms conducting PIE audits. The UK Government, in its 2021 consultation ‘Restoring trust in audit and corporate governance’, commented as follows:
"9.1.6 The Government has concluded that the regulator [the FRC] should carry out the task of determining whether individuals and firms are eligible for appointment as statutory auditors of PIEs, rather than continuing the present delegation of this task to the RSBs. The RSBs would continue to carry out the delegated task of determining whether individuals and firms are eligible to be appointed as statutory auditors of non-PIE entities.
9.1.7 The Government considers it a priority for the regulator to reclaim the task of determining the eligibility of individuals and firms to carry out PIE statutory audits so as to raise the quality of those audits. It further considers that the concerns raised by consultees to date can largely be mitigated by the FRC consulting with the RSBs on the design of the new regime."
In light of the above, the FRC has been preparing to assume responsibility for PIE Auditor Registration. As part of those preparations, the FRC has developed the PIE Auditor Registration proposals that are the subject of this consultation.
The proposal is that the decision-making in relation to registration matters will be FRC executive led, in line with the approach of other regulators, and that the FRC will work closely with the RSBs and other stakeholders to implement the new registration process.
Alongside the consultation paper, the FRC has also published:
- Draft guidance manual for PIE Auditor Registration
- Draft Proposed Changes to the Eligibility Criteria
- Draft PIE Auditor Regulations