The regulatory and reporting landscape for directors is increasingly complex. Expectations around governance, risk management, non-financial reporting and audit continue to expand, while scrutiny from regulators, investors and other stakeholders has intensified. For inexperienced directors in particular, navigating these responsibilities can be daunting.

Aimed primarily at first-time directors of smaller listed entities, ICAEW’s new guide, Audit and assurance in context: what audit committees want directors to understand, brings together regulatory requirements, established good practice and real-world insights from experienced audit committee chairs and auditors.

While compliance remains a necessary foundation, the interviews underpinning the guide reinforce a consistent message: effective boards look beyond compliance to culture, judgement and long-term value creation.   

Bridging regulation and the boardroom

Directors’ responsibilities are set out across a wide range of overlapping legislation, codes and guidance. This includes company law, the UK Corporate Governance Code and the FRC’s Guidance on Audit Committees. The new guide does not seek to restate these in full. Instead, it signposts the key requirements and explains how they play out in real-world boardroom and audit committee settings.

Drawing on candid interviews with audit committee chairs and auditors, the guide highlights common pitfalls as well as examples of what works well . Interviewees spoke openly about the importance of strong relationships with auditors, constructive challenge, and the confidence to ask uncomfortable questions.

What the guide covers

The guide is structured around three core themes:

Roles and responsibilities

It opens by setting out the roles and responsibilities of boards, directors and audit committees, clarifying who does what and where accountability sits. There is particular emphasis on the audit committee’s oversight role in financial reporting, audit, risk management and internal control.

The external audit process

The guide explores the external audit process in depth - from tendering and planning through to reporting and evaluation - and considers the defining features of a high-quality audit. Interviewees stressed that audit quality is driven more by people, relationships and behaviours throughout the yea r than by the final audit report.

Non-financial reporting and risk management

The guide looks beyond the financial statements to the growing importance of non-financial reporting and risk management. Sustainability, cyber security, resilience, viability and internal controls reporting, and assurance of these topics, are now firmly on board agendas, even for smaller listed companies.

As one audit committee chair reflected: “We’ve been doing double entry bookkeeping for centuries. We’ve been doing sustainability reporting for just a few years.”

The guide acknowledges this learning curve and helps directors understand where assurance fits, what questions to ask, and how to avoid blurred lines between management, internal audit and external assurance providers.

Supporting directors: audit, assurance, compliance and beyond

Taken together, the interviews and analysis highlight the increasing breadth and depth of directors’ responsibilities, and the need for boards to balance technical compliance with effective oversight, sound judgement and long-term thinking.

Audit and assurance in context: What audit committees want directors to understand forms part of ICAEW’s wider programme of resources for directors, boards and audit committees, including guidance, thought leadership and practical tools on:

• audit quality,
• sustainability assurance,
• cyber security,
• internal controls, and
• assurance mapping. 

These resources are designed to help directors keep pace with change, ask better questions, and discharge their responsibilities effectively in an increasingly complex environment. ICAEW also offers wider information relating to directors’ duties and responsibilities.