The UK Financial Reporting Council (FRC) will adopt proposed international improvements to auditing standards, which bans the use of internal audit staff as members of audit engagement teams in order to help preserve auditor independence.

Previously the FRC’s standards included guidance allowing direct assistance in certain circumstances, subject to appropriate safeguards. However, the FRC concluded this was contrary to the principle of independence and the practise should therefore no longer be permitted.

The move reflects changes to the International Acounting and Auditing Standards Board’s (IAASB) International Standards on Auditing, and was also the advice of the Audit and Assurance Council.

FRC Board member and chairman of the Audit and Assurance Council Nick Land explained "shareholders generally expect external auditors should be seen to be free from threats to their independence".

"Permitting the direct use of internal auditors involves agreeing lower independence standards for some members of the audit engagement team, which leans against this expectation. Accordingly, the FRC has concluded that this should no longer be allowed," Land said.

The consultation on timing of implementation remains open for a period of two months to 9 April 2013.


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