The new Code is a result of the findings of a monitoring programme undertaken by the FRC which identified scope to further strengthen its oversight and governance and to align the provisions of the Code with Operational Separation for the Big Four firms.

It separates the roles of the board chair and senior partner/chief executive, clarifies the role played by partnership boards in holding management to account and introduces criteria for board composition, reinforcing the position of independent non-executives within audit firms.

For the largest audit firms, it sets out a clearer distinction between the role of Independent Non-Executives (INEs) and Audit Non-Executives (ANEs). The new Code also more closely aligns with the UK Corporate Governance Code, emphasising the importance of long-term sustainability, culture and employee engagement.

Sarah Rapson, The FRC’s executive director of supervision, said: “The revised Audit Firm Governance Code further strengthens the governance and independent oversight of the largest audit firms to ensure audit quality is prioritised.

“Well governed audit firms that act in the public interest are more likely to deliver high-quality audit on a consistent basis. This will benefit investors, pensioners, taxpayers and users of financial accounts.”