SUP 3A.5 Auditors’ independence

To carry out their duties properly, an auditor needs to be independent of the institution they are auditing so they are not subject to conflicts of interest. Many relevant institutions are also subject to requirements under the Companies Act 2006 on auditors’ independence.

A relevant institution must take reasonable steps to ensure that the auditor which it appoints is independent of the institution.

If a relevant institution becomes aware at any time that its auditor is not independent of the institution, it must take reasonable steps to ensure that it has an auditor independent of the institution. The relevant institution must notify the FCA if independence is not achieved within a reasonable time.

The FCA will regard an auditor as independent if their appointment or retention does not breach the ethical guidance in current issue from the auditor’s recognised supervisory body on the appointment of an auditor in circumstances which could give rise to conflicts of interest.