The Financial Reporting Council (FRC) in the UK has revised two auditing standards to strengthen how auditors assess the risk of material misstatement arising from non-compliance with laws and regulations.
The regulator has published revised ISA (UK) 250, Consideration of Laws and Regulations in an Audit of Financial Statements, and ISA (UK) 270, Special Considerations for Audits of Public Interest Entities—Communicating and Reporting to an Appropriate Authority Outside the Entity.
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The standards replace a more procedural approach with a risk-based framework.
The FRC said this will make the requirements more scalable and support auditors’ professional judgment rather than encouraging a checklist-led exercise.
The revisions also improve the connection between the two standards and ISA (UK) 315, which sets the framework for auditors’ risk assessments.
They are intended to help audit firms address legislative developments in the UK, including the Economic Crime and Corporate Transparency Act 2023.
FRC consulted on the proposals in spring 2026.
Following stakeholder feedback, it expanded supporting material in both standards to clarify implementation, reinforce proportionality, and reduce inconsistent interpretation or excessive audit work.
The regulator has also issued a mythbuster document addressing common questions raised during the consultation.
The revised standards will apply to audits of financial statements for periods beginning on or after 15 December 2027.
FRC said it will continue to work with stakeholders ahead of implementation to support consistent and proportionate application.
Earlier this month, FRC released a staff guidance note for auditors planning to adopt the revised International Standard on Auditing (ISA) (UK) 700.
The guidance aimed to help practitioners make judgements when applying the standards.
