The Code applies to the Big Four and to other firms auditing FTSE 350 companies. Going forward it will also apply to firms that audit significant numbers of other types of public interest entities.

With operational separation of audit practices at the largest audit firms, audit firm governance is at a turning point. The FRC said the proposals will embed a continued focus on the public interest and audit quality across the UK’s largest audit firms.

While the Big Four firms have responded positively to operational separation, monitoring work by the FRC has found there is scope to further strengthen oversight and governance.