UK listing rule changes shake up reporting accountant roles
The Financial Reporting Council (FRC) has issued a Staff Guidance Note in response to the Financial Conduct Authority’s (FCA) revised UK Listing Rules (UKLR), which took effect in July 2024. These changes sweep away the long-standing requirement for independent assurance on shareholder circulars and the mandatory appointment of a Sponsor for certain transactions. As a result, reporting accountants find themselves at a crossroads, with their role in these transactions dramatically reshaped.
Previously, reporting accountants provided assurance opinions on financial information included in investment circulars, which were required for shareholder votes on significant transactions. Under the new UKLR, these votes—and consequently, the investment circulars—are no longer mandatory. Instead, companies must issue a “significant transaction announcement”, which may contain financial information but does not require independent assurance. In other words, what was once a mandatory checkpoint for investor confidence is now a matter of corporate discretion.
The FRC’s guidance clarifies how these changes interact with its Ethical Standard and Standards on Investment Reporting (SIRs). It upholds three key principles: engagements should be treated based on the rules in place when they began, previously mandated engagements remain permissible voluntarily, and voluntary engagements are now subject to the non-audit service fee cap. Additionally, while the SIRs were designed for investment circulars, the FRC confirms they may still be used for voluntary assurance engagements related to market announcements.
With governments the world over looking at questions of market competitiveness, policy makers will be balancing the need for strong governance and independent checks and balances with speed and flexibility. Some companies may continue seeking independent assurance to bolster credibility, while others may see this as a chance to cut costs and streamline transactions.
For more details, see the full FRC Staff Guidance Note here.
