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FRC Ethical Standard: Persons closely associated

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Published: 17 Jan 2017 Reviewed: 03 Feb 2020 Update History

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Technical helpsheet explaining who would be considered to be a relative or member of a household, for the purposes of the FRC Ethical Standard (2016).


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

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


The FRC Glossary of Terms – Ethics and auditing states that a ‘person closely associated’ is:

  1. A spouse, or a partner considered to be equivalent to a spouse in accordance with national law;
  2. A dependent child, in accordance with national law;
  3. A relative who (at any time in the period from the start of the financial period in respect of which the engagement is being conducted to the date on which the engagement report is signed) has lived in the same household as the person with whom they are associated for at least one year;
  4. A firm whose managerial responsibilities are discharged by, or which is directly or indirectly controlled by, the firm / person with whom they are associated, or by any persons mentioned in (a), (b) or (c) or in which the firm or any such person has a beneficial or other substantially equivalent economic interest;
  5. A trust whose managerial responsibilities are discharged by, or which is directly or indirectly controlled by, or which is set up for the benefit of, or whose economic interests are substantially equivalent to, the firm / person with whom they are associated or any person mentioned in (a), (b) or (c).


The FRC Rolling Record (15 June 2016 meeting) states that audit firms should use the HRMC definition of relative, which is a linear definition:

A relative is a brother, sister, ancestor or lineal descendant. This means that people like cousins are not relatives for the purposes of this definition. This also captures a spouse or civil partnership.


The definition of ‘household’ has not been addressed by the FRC. The Collins dictionary includes a practical definition:

A household is all the people in a family or group who live together in a house.

This would mean that you and any other occupant living under the same roof, at the same physical address, would be considered to be part of the household. Consideration should however be given to flexible, casual and varying living arrangements whereby one or more occupants may not necessary be seen to continuously reside.

The reference to ‘household’ in the definition of ‘person closely associated’ is intended to cover those who interact with you closely enough to be able to exert influence.

While this should clarify most situations, there may be a handful of cases of doubt where people live in a number of places. In his situation it may be helpful to consider ‘primary residence’, in determining whether an individual is a member of a household. Primary residence is not defined in law but over a number of years there have been several tribunal / court cases which have determined what is and is not a primary residence.

Some examples of personal considerations for the individual when determining their primary residence are listed below. It is the address by which:

  • Your family reside (husband / wife / spouse / spousal equivalent / children);
  • At which residence you are registered with a doctor / dentist;
  • Where the majority of your possessions are kept;
  • Where you return to during periods of leave or at the end of employment;
  • Your long-term intentions;
  • Where you are registered to vote;
  • Membership of clubs and other social activities;
  • Where you receive post; and
  • The property you regard as your main residence.

If in doubt seek advice

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.

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ICAEW cannot accept responsibility for any person acting or refraining to act as a result of any material contained in this helpsheet. This helpsheet is designed to alert members to an important issue of general application. It is not intended to be a definitive statement covering all aspects but is a brief comment on a specific point.

ICAEW members have permission to use and reproduce this helpsheet on the following conditions:

  • This permission is strictly limited to ICAEW members only who are using the helpsheet for guidance only.
  • The helpsheet is to be reproduced for personal, non-commercial use only and is not for re-distribution.

For further details members are invited to telephone the Technical Advisory Service T +44 (0)1908 248250. The Technical Advisory Service comprises the technical enquiries, ethics advice, anti-money laundering and fraud helplines. For further details visit icaew.com/tas.

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  • Update History
    01 Jul 2013 (12: 00 AM BST)
    First published
    20 Mar 2024 (12: 00 AM GMT)
    Changelog created. Converted to new template. Links updated. Helpsheet has not had a full review