The FRC is seeking feedback on proposed updates to the UK auditor reporting standards by 16 January 2026. The updates aim to declutter audit reports, reduce boilerplate disclosures, and enhance the relevance and usefulness of the information included. It also ensures continued alignment with international standards.

Increasing the quantity of useful Information

The consultation document proposes that auditors include key observations on all key audit matters (KAMs). Currently, this is only required for public interest entities (PIEs), but the FRC now aims to extend it to all listed entities and those that choose to, or are required by law or regulation, to communicate KAMs.

Where the KAM relates to the entity’s accounting practices, the FRC proposes that auditors report their views about significant qualitative aspects of those practices, including accounting policies, estimates and financial statement disclosures.

For entities that are required or choose to follow the UK Corporate Governance Code, the FRC has proposed that auditors will need to describe the impact of the entity’s controls on the planning and performance of the audit under para 17-3

Auditors will also need to consider whether any significant deficiencies in internal control identified during the audit would warrant inclusion in the audit report. The FRC states that recent changes to the UK Corporate Governance Code relating to the entity’s disclosures regarding internal control should not alter the auditor’s responsibilities to read and consider this information (as per the requirements of ISA (UK) 720). It provides application material to help auditors when reading and considering corporate governance disclosures.

The FRC has also introduced an overarching requirement in para 8-1 for auditors to provide relevant information that helps users understand the significance of matters communicated. It requires auditors to use language directly related to the circumstances of the entity, minimising the use of ‘standardised phrases and terminology’.

Streamlining the audit report

Under the proposed changes, auditors will no longer be required to describe their responsibilities for reporting by exception, along with a conclusion on these matters, unless there is something to report. This is part of the FRC’s drive to remove clutter from the audit report – much of which was introduced by the FRC itself in the past. The auditor’s responsibilities in relation to these requirements will now be included on the FRC website, with a corresponding link provided, rather than in the audit report itself.

Requirements to describe the extent to which the audit was considered capable of detecting irregularities, including fraud, will be limited to PIEs and other listed entities. This returns requirements to their pre-2019 state, before the FRC extended the requirement to all entities.

Further changes to ensure alignment with international standards include the removal of the distinction between ‘other information’ and ‘statutory other information’ and adopting minor amendments from the IAASB’s Listed Entity and PIE Track 1 and 2 projects.

Get involved

ICAEW will be responding to the consultations, and any comments should be sent to emma.cross@icaew.com or helen.pierpoint@icaew.com