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The Audit Firm Governance Code UK

The Audit Firm Governance Code applies to eight audit firms that together audit about 95% of the companies listed on the Main Market of the London Stock Exchange.

The Audit Firm Governance Code, published in January 2010, applies to eight audit firms that together audit about 95% of the companies listed on the Main Market of the London Stock Exchange. For these firms, the code sets a benchmark for good governance which other audit firms may wish to voluntarily adopt in full or in part.

The reputations that the audit firms have built upon their licence to audit are of vital public interest. One way in which they can maintain public trust in their brands is by being seen as exemplars of best practice governance.In this context, it is however important to recognise that the governance challenges faced by audit firms are different from those faced by listed companies.

In drawing on aspects of the UK Corporate Governance Code such as the comply or explain approach, the Audit Firm Governance Code establishes the principle that audit firms should appoint independent non-executives within their governance structure.

It also codifies much existing good practice and links to matters that audit firms must comply with as regulated professional partnerships.

Full details on ICAEW, UK website.

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