Several key tenets of audit policy have been stripped out of the 23-page document having been provided for in law since the introduction of the EU’s Audit Reform Directive (ARD) on 17 June.

These include the ten year tendering requirement, the ‘comply or explain’ basis, and mandatory rotation of auditors every 20 years, along with advance notice of tenders.

‘It has become a matter of law under ARD, so we’ve taken those requirements out of the code as it’s now dealt with through the law,’ FRC project manager for the audit firm governance code Susan Currie told CCH Daily.

The FRC added it would conduct ‘regular reviews of transparency reports to highlight best practice and innovation in governance’, which are expected to be approximately every two years.

‘Rather than simply reporting against compliance, it would be a case of trying to show what good looks like,’ FRC executive director of governance Melanie McLaren said.

McLaren added the FRC will consider the extent to which firms are adopting provisions from the UK Corporate Governance Code and assess whether there is scope for their future incorporation into the Audit Firm Governance Code.

‘There are some things it’s appropriate for public companies to do that wouldn’t work for a partnership at an audit firm,’ McLaren added. ‘There are elements of good practice in the Corporate Governance Code you may wish to include on a voluntary basis in your own firm, but we wouldn’t actually make it a formal part of the Audit Firm Governance Code.’

The FRC Audit Firm Governance Code is available here