FRC - revised ethical standard - part 1

In this lesson

1. 0:00 FRC ethical standard overview and firm-wide requirements
2. 1:14 Financial interests and independence safeguards
3. 2:59 Business relationships and loan restrictions
4. 4:00 Family relationships and employment conflicts
5. 5:40 Partner rotation and two-year cooling-off periods
6. 7:08 Long association rules for listed and non-listed clients
7. 9:14 Audit tenders and fee independence requirements

About this lesson

The video covers Section One of the standard, which sets the foundation: audit firms must establish ethical policies, monitor compliance, and create reporting systems for breaches. You'll then explore Section Two in detail, focusing on financial interests, business relationships, and family connections. Key restrictions include prohibitions on direct financial interests in audited entities, loan arrangements with clients, and close business relationships outside the audit engagement itself. You'll also learn critical rules around employment and rotation. When partners or staff move between audit firms and client organisations, strict timing rules apply—typically two-year gaps are required. For listed clients, engagement partners must rotate after five years (extendable to seven in certain circumstances), while non-listed clients require consideration after ten years. The lesson explains audit tenders, which must occur every ten years, and fee rules that prevent contingent fees and low-balling arrangements that could compromise audit quality. This knowledge directly supports your understanding of audit independence and quality control—core themes in AA and essential for maintaining professional credibility in practice.

Duration: 11m