Covered person

This helpsheet has been issued by ICAEW’s Technical Advisory Service to help ICAEW members interpret the definition of ‘covered person' in the FRC Ethical Standard.

Members may also wish to refer to the following related guidance:

• FRC Ethical Standard

The FRC Glossary of Terms – (Auditing and Ethics) defines a ‘covered person’ as:

For an audit engagement, the definition then continues in four broad areas (each of which is addressed in further detail below):

• The engagement team;
• Other people involved in the audit;
• Supervisory, management and oversight personnel; and
• Other persons in a position to influence.

A covered person includes:

Definition of engagement team

The FRC Glossary of Terms – Auditing and Ethics defines ‘engagement team’ as:

It goes on to confirm that this includes the audit team, professional personnel from other disciplines involved in the engagement and those who provide quality control (other than the engagement quality control reviewer) or direct oversight of the audit engagement, but it does not include any external experts contracted by the firm.

A covered person includes:

This part of the definition would include external experts, but (in the case of audits conducted in accordance with ISAs (UK)) not members of the audited entity’s internal audit function as ISA (UK) 610 Using the Work of Internal Auditors prohibits the use of the audited entity’s internal audit staff to provide direct assistance to the audit team (paragraph 5-1).

A covered person includes:

This includes each partner, principal, shareholder and other person in a firm:

A covered person includes:

An independent, non-executive appointed by a firm to act in a public interest role on a governance or oversight body of the firm is not a covered person.

ICAEW members, affiliates, ICAEW students and staff in eligible firms with member firm access can discuss their specific situation with the Ethics Advisory Service on +44 (0)1908 248 250 or via webchat.