4A majority of the members of the relevant body must be independent.
At least one member of the relevant body must have competence in accounting or auditing, or both.
The members of the relevant body as a whole must have competence relevant to the sector in which the issuer is operating.
[Note: article 39(1) of the Audit Directive]
An issuer must ensure that, as a minimum, the relevant body must:
monitor the financial reporting process and submit recommendations or proposals to ensure its integrity4;
monitor the effectiveness of the issuer’s internal quality control4 and risk management systems and, where applicable, its internal audit, regarding the financial reporting of the issuer, without breaching its independence4;
monitor the statutory audit of the annual and consolidated financial statements, in particular, its performance, taking into account any findings and conclusions by the Financial Reporting Council under article 26(6) of the Audit Regulation4;
review and monitor the independence of the statutory auditor in accordance with paragraphs 2(3), 2(4), 3 to 8 and 10 to 12 of Schedule 1 to the Statutory Auditors and Third Country Auditors Regulations 2016 (SI 2016/649) and article 6 of the Audit Regulation, and in particular the appropriateness of the provision of non-audit services to the issuer in accordance with article 5 of the Audit Regulation4;
inform the administrative or supervisory body of the issuer of the outcome of the statutory audit and explain how the statutory audit contributed to the integrity of financial reporting and what the role of the relevant body was in that process; and4
except when article 16(8) of the Audit Regulation is applied, be responsible for the procedure for the selection of statutory auditor(s) and recommend the statutory auditor(s) to be appointed in accordance with article 16 of the Audit Regulation.4
In the FCA’s view, compliance with Provisions 14, 24, 25 and 265 of the UK Corporate Governance Code and following the statement of good practice set out in paragraph 63 of the ‘Guidance on Board Effectiveness’ published by the Financial Reporting Council in July 2018 will result in compliance with DTR 7.1.1R to DTR 7.1.3R and with DTR 7.1.5R except as regards disclosing how the body which carries out the functions required by DTR 7.1.3R is composed5.3322