UK’s FRC overhauls PIE auditor registration rules 

The UK’s Financial Reporting Council (FRC) has updated its Public Interest Entity (PIE) Auditor Registration Regulations and related guidance governing the PIE Auditor Register (PAR).

The regulator said the amendments are intended to reinforce its oversight of audit firm restructurings, while trimming administrative demands where possible for firms on the register.

The PAR, introduced in December 2022, was set up as a safeguard against the risk that weak audit quality could damage investors and the wider public.

According to the FRC, the audit market has evolved rapidly since then, with a notable increase in restructuring deals and private capital injections involving audit firms.

Previously, PAR-registered firms were allowed to inform the FRC of changes to ownership or governance up to ten working days after completion.

Under the revised rule, firms must alert the FRC “as early as reasonably possible” ahead of any intended changes, including restructurings and transactions involving private capital.

The FRC said the earlier notification requirement is designed to give it time to consider whether proposed structural changes could affect a firm’s ability to comply with the regulations, and to act in public interest if necessary, before changes are implemented.

Beyond the notification shift, the updated regulations introduce a simplified process for re-registering responsible Individuals who have previously appeared on the PAR.

They also establish a new exemption mechanism for firms wishing to audit an entity that was not a PIE at the relevant accounting reference date.

The framework further adjusts the timing of annual returns and audit portfolio submissions, allowing more flexibility, and sets out clearer procedures for applying conditions, undertakings, waivers, suspensions and for handling appeals.

FRC noted that all four of the UK’s recognised supervisory bodies for audit participated in the consultation on the changes, alongside 27 PAR-registered audit firms and one additional organisation.

FRC executive director of supervision Anthony Barrett said: “The audit market is changing, with increasing restructuring activity and private capital investment across the sector.

“These updated regulations seek to ensure that the FRC has the visibility it needs to help drive improvements in audit quality, during periods of significant change, while also responding to the sector’s call for greater flexibility and reduced administrative burden.”

Earlier this month, FRC issued updated guidance on “comply or explain” governance reporting.