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Independence guidance

Advice on the implementation of the FRC Ethical Standard for Auditors and other matters.

ICAEW’s Technical Advisory Service offers members a range of helpsheets, frequently asked questions and other guidance on ethical, UK GAAP, practice and technical matters. It is accessible in a number of ways, including by topic.

Auditor independence

Audits in accordance with ISAs (UK) require the application of the FRC Ethical Standard for Auditors (‘FRC ES’) rather than section 290 of ICAEW’s own Code. The FRC ES succeeds the Auditing Practices Board’s Ethical Standards for Auditors (‘APB ES’) and applies for audits of periods where those periods commenced after 17 June 2016.

ICAEW has prepared a number of items of guidance on the application of the auditor independence requirements of the APB ES. These generally remain applicable in respect of audits in accordance with the FRC ES, particularly for the audits of non-public interest entity audits (most non-financial sector private companies). They are in the course of being updated and reorganised to facilitate navigation, but continue to be available from the topic link above, typically under ‘auditor independence' or ‘independence’ topic headings.

A number of additional guidance notes have been and are being prepared based on changes to the wording between the APB ES and the FRC ES, or on new requirements for public interest entity (‘PIE’)audits in particular, as a result of the incorporation of EU Audit Regulation 537/2014 independence requirements for PIE audits into the FRC ES. These are being made available from the topic link above and include:

The FRC itself is now issuing guidance by way of a number of staff notes and additional comments by way of a rolling record of actions arising from its Technical Advisory Group.

Note that as the FRC ES is issued by the FRC rather than ICAEW, the FRC is the ultimate authority on interpreting what that standard means. ICAEW’s guidance referred to above is prepared after lengthy discussions with the FRC and where possible points to any guidance the FRC has given itself. Nevertheless, it does not necessarily reflect the interpretation that the FRC itself might apply in the particular circumstances applying.