FRC overhauls UK audit standards to support concise reporting

The Financial Reporting Council (FRC) in the UK has made changes to three auditing standards in an attempt to make audit reports concise and easier for investors to use.

The revisions apply to ISA (UK) 700, ISA (UK) 701 and ISA (UK) 720.

The move follows a public consultation, during which the changes were backed by audit practices, investors and governance experts.

At the same time, the regulator has updated its guidance on how auditors should respond to the revised UK Corporate Governance Code.

According to the FRC, the audit opinions have become steadily longer, with extensive boilerplate wording that offers little additional insight for readers.

The updated standards are aimed at cutting back on such content by removing “unnecessary” reporting elements and concentrating on disclosures that investors consider most relevant.

They are also designed to bring UK rules more closely into line with comparable international auditing requirements.

For companies that report under the UK Corporate Governance Code, auditors will now have to explain in their reports how the entity’s internal controls influenced the audit.

When auditors identify particularly serious failures in controls, they are expected to flag those issues explicitly in the audit report.

To help ensure auditors apply these expectations consistently alongside the new Provision 29 obligations, the FRC has also issued a supporting “mythbuster” document. The publication sets out what auditors “are – and are not – required to do” when a company’s annual report includes a Provision 29 statement on material controls.

As part of the overhaul, the FRC has withdrawn earlier bulletins whose content is now replaced by the new auditing standards.

The revised standards will come into effect from 15 December 2026.

The FRC recently updated its Audit Enforcement Procedure, widening the actions available to address audit failings.