‘Our Approach to Audit Supervision’ highlights the FRC’s approach to supervision and what the watchdog expects from firms.

The FRC’s supervisory work comprises of engagement framework of regular meetings, audit inspections, firm-wide reviews of audit quality controls, reviews of root cause analysis, action planning and quality improvement plans, cross-firm reviews of key supervisory pillars, pre-appointment meetings for key roles and risk reporting protocols.

Sir Jonathan Thompson, CEO of the FRC, said that the watchdog has “revamped” its approach to the way it supervises the largest audit firms through the creation of three teams, – Audit Firm Supervision, Audit Market Supervision and Audit Quality Review (within the Supervision Division).

He said: “Each of these teams have clear mandates to focus upon audit quality and firm resilience through their supervisory activity. Another key feature of our work is an emphasis on creating a culture of challenge in the firms.”

He said that regular engagement with firms is a key part of ensuring good practice is disseminated and any concerns and issues can be raised as early as possible and rectification plans agreed.

He added that this is in everyone’s interest, not least the public interest.