The Financial Reporting Council (FRC) is introducing a revised model for supervising audit practitioners in the UK, aiming to create a more proportionate and integrated framework to support audit quality and market resilience.
The move follows extensive engagement with stakeholders. The regulator has been working with companies and recognised supervisory bodies since 2018 to address weaknesses and raise audit quality standards.
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FRC chief executive Richard Moriarty said: “The evolution of our approach to audit supervision reflects a wider programme in creating a regulatory environment that strengthens trust in UK markets while supporting business growth.”
The FRC plans to reshape its supervisory methodology to align more closely with the current structure of the audit market and the broader corporate reporting environment.
At the centre of the redesigned model is a greater focus on companies’ systems of quality management, which will become the primary lens through which supervisory work is carried out.
The approach is built on a consistent, risk-based assessment, backed by targeted follow-up interventions, thematic reviews and corroborative inspection activity.
The new regime is scheduled to start applying to the largest operators from April 2026, with further elements to be piloted during the 2026/27 period.
The changes are designed to sit alongside the FRC’s existing initiatives including the Building Capacity and Capability For Smaller Firms programme and small and medium-sized enterprise market study initiatives.
FRC Supervision executive director Anthony Barrett said: “Our purpose has always been to serve the public interest, underpin investor confidence and support the UK’s economic success.
“Effective supervision is fundamental to sustaining a trusted and resilient audit market and profession as sustainable audit quality supports confidence in the UK’s capital markets.”
Earlier this month, the FRC issued updated guidance on “comply or explain” governance reporting.
