The Financial Reporting Council (FRC) in the UK has published its first review of the Audit Firm Governance Code, and is seeking feedback on extending a similar approach to firms’ global networks. In an assessment of the 2010 audit firm governance code the FRC suggested more should be done to reconcile the code with the public’s interest, including the introduction of “an independent voice” at an international network level.
In the review published this month, the FRC said that despite not being a regulatory requirement, the eight firms to which the code is applied (Baker Tilly, BDO, Deloitte, EY, Grant Thornton, KPMG, PwC and Mazars) have used it to improve the governance of their businesses. However, the report goes on to state that there is scope for extending the code.
In particular, it suggests that the principle of external challenge, implemented nationally by the firms through the introduction of independent non-executives, be extended to the international network organisations as well.
In 2010, the eight original firms audited around 95% of relevant Public Interest Enterprises and the code was introduced as a voluntary benchmark for good governance.