SMF11 Chair of Audit Committee Hiring Guide

What Is the SMF11 Senior Management Function?

Senior Management Function 11, the Chair of the Audit Committee, is the designated accountability for the independent oversight of a UK regulated firm’s financial reporting, internal audit function and external audit relationship. At dual-regulated firms SMF11 is a PRA-designated function; at FCA enhanced solo-regulated firms it is FCA-designated. The SMF11 holder is a Non-Executive Director who carries personal regulatory accountability, under the Senior Managers and Certification Regime (SMCR), for the effectiveness and independence of the audit committee’s governance of these functions.

This guide explains the SMF11 role in depth: the regulatory framework, what the Chair of the Audit Committee does in practice, what regulatory approval requires, what the candidate profile looks like, and how to run the search. It draws on the work Exec Capital does on regulated firm senior appointments and on the cross-portfolio relationship with our sister firm Accountancy Capital, which specialises in ACA and ACCA-qualified senior finance appointments, for the accounting depth that the SMF11 appointment requires.

The Chair of the Audit Committee is among the most technically demanding NED appointments in a regulated firm. The regulators’ expectation, and the UK Corporate Governance Code’s expectation, is that the Chair of the Audit Committee has genuine financial reporting and audit expertise, not simply general governance experience. A candidate who is a capable board member but lacks the technical accounting or audit background to meaningfully challenge the external auditor, the Finance Director and the internal audit function will struggle with the fitness and propriety assessment and, more importantly, will fail to provide the governance oversight the role requires. For firms filling this seat as part of a wider board refresh, our board of directors recruitment practice covers the full set of committee chair appointments.

The Audit Committee’s Governance Role at a Regulated Firm

The audit committee at a UK regulated firm carries oversight accountability across four interconnected areas, each of which falls within the SMF11 holder’s personal accountability under the SMCR.

Financial reporting integrity. The audit committee oversees the quality and accuracy of the firm’s financial reporting: annual accounts, half-year accounts, regulatory capital reporting, and any other financial information published to investors, regulators or the market. The Chair is responsible for ensuring that significant judgements in the accounts (provisioning levels, goodwill impairment tests, going concern assessments, fair value measurements) are challenged properly and are consistent with the firm’s actual financial position. At regulated firms, the financial reporting is scrutinised by the FCA and, for dual-regulated firms, the PRA, which means that inadequate audit committee challenge creates regulatory exposure as well as investor risk.

External audit relationship. The audit committee oversees the appointment, independence, performance and remuneration of the external auditor. This includes the tendering process for the audit appointment (public interest entities must put the audit out to tender at least every ten years and rotate the audit firm after a maximum of twenty), the assessment of auditor independence when the audit firm provides non-audit services, and the committee’s response to the auditor’s findings: the management letter and any modification of the audit opinion. The Chair of the Audit Committee meets the external auditor privately at least annually, without management present, to discuss any concerns the auditor has that management would prefer not to raise in the committee.

Internal audit oversight. The audit committee oversees the internal audit function: its independence, its resourcing, its scope and plan, and management’s response to internal audit findings. At firms without a dedicated internal audit function, the audit committee oversees whatever assurance arrangements serve an equivalent purpose. The independence of the internal audit function, both from the CFO to whom it may administratively report and from the management activities it is auditing, is a primary audit committee governance concern. Our guide on how to hire a Head of Internal Audit covers the other side of that relationship.

Risk management and internal controls. While the risk committee (SMF10) has primary oversight of the firm’s risk management framework, the audit committee has specific oversight of the internal control environment: the processes and systems that prevent and detect errors, fraud and misstatement in financial reporting. At firms without a separate risk committee, the audit committee typically assumes broader risk oversight. The delineation of responsibility between audit and risk committees, where both exist, should be specified in the respective committees’ terms of reference.

The SMCR Framework and SMF11’s Prescribed Responsibility

SMF11 is one of the non-executive Senior Management Functions under the SMCR, sitting alongside SMF9 (Chair), SMF10 (Chair of Risk Committee), SMF12 (Chair of Remuneration Committee) and SMF14 (Senior Independent Director). The prescribed responsibility normally attached to SMF11 is oversight of the firm’s internal audit function: ensuring that the firm has an adequate internal audit function (or equivalent assurance arrangements), and that the audit committee’s oversight of that function, including the performance of the head of internal audit, is effective and independent.

As with all SMCR prescribed responsibilities, the Statement of Responsibilities for the SMF11 holder must accurately reflect this accountability. The SoR should be drafted with legal counsel’s input, reviewed by the compliance function, and presented to the candidate in its final form before the offer is made. Candidates with prior SMF experience will scrutinise the SoR carefully. The firm should also ensure the SoR is consistent with its Management Responsibilities Map: any overlap or ambiguity with the SMF10 Chair’s responsibilities (where a risk committee exists) or with any executive responsibility for internal audit oversight should be resolved before the application is submitted. Since 24 April 2026, under PS26/6, firms no longer resubmit an SoR after every change; amended SoRs are sent periodically, no later than six months after the last submission. Our guide to Statements of Responsibilities for board appointments sets out how to draft one for a non-executive SMF.

For the full SMCR framework and how SMF functions relate to each other, the SMF Roles: A Complete Guide is the foundational reference. For the SMF10 Chair of Risk Committee’s overlapping governance responsibilities, the SMF10 hiring guide provides the counterpart perspective.

The Chair of the Audit Committee and the External Auditor

The external auditor relationship is the most technically demanding aspect of the SMF11 role and the one that most clearly distinguishes a genuinely qualified Chair from a governance generalist in the position. The Chair needs to understand the audit process well enough to assess whether the external auditor is conducting a quality audit, not just a compliant one.

A quality audit is one where the auditor has genuinely challenged management’s judgements (probed the assumptions underlying provisions, tested the completeness of revenue recognition, assessed the going concern basis rigorously) rather than simply agreeing with what management has presented. An audit committee chair who cannot distinguish a challenging auditor from a deferential one is unable to fulfil the oversight function the role requires.

Specific areas where the Chair should be equipped to engage substantively with the external auditor include: the auditor’s assessment of the firm’s most significant accounting estimates and judgements; any Emphasis of Matter or material uncertainty paragraphs in the audit opinion; the auditor’s findings on internal controls over financial reporting; and the auditor’s independence from management, specifically whether any non-audit services provided by the audit firm could impair the auditor’s objectivity. The FRC’s UK auditing standards and Ethical Standard provide the technical framework within which the external auditor operates and which the Chair needs to understand. For listed and Code-applying firms, the FRC’s Audit Committees and the External Audit: Minimum Standard, published in May 2023, now sets the baseline for how the committee tenders, oversees and reports on the external audit.

The private meeting between the Chair and the external auditor, typically held annually without management or executive directors present, is one of the most important governance mechanisms available to the audit committee. The auditor’s willingness to be candid in this meeting, and the Chair’s ability to draw out concerns that would not be raised in front of management, depends on the quality of the relationship and the Chair’s technical credibility.

Accounting Qualifications and the SMF11 Competence Requirement

The fitness and propriety assessment for SMF11 looks for relevant financial reporting and audit expertise. The UK Corporate Governance Code sets out this expectation explicitly in Provision 24: the board should satisfy itself that at least one member of the audit committee has recent and relevant financial experience, and the committee as a whole should have competence relevant to the sector in which the company operates. In practice the Chair is usually the member who provides that financial experience.

For most firms, the relevant qualification baseline is ACA (ICAEW), ACCA or equivalent: a qualified accountant with post-qualification experience in financial reporting, audit or equivalent financial governance roles. The ICAEW is a primary professional body for audit committee chair competence in the UK, and ICAEW guidance on audit committee effectiveness provides a useful framework for assessing whether an SMF11 candidate is adequately equipped. Candidates without formal accounting qualifications but with deep experience of financial reporting governance at senior board level (a former CFO at a comparable firm, for example) may also meet the competence threshold, but should expect more detailed regulatory scrutiny of their specific financial reporting expertise.

Our sister firm Accountancy Capital, which specialises in ACA and ACCA-qualified senior appointments, provides specific coverage of the SMF11 candidate pool with qualified accountant backgrounds. For firms where the SMF11 appointment will be made primarily on the strength of accounting credentials, Accountancy Capital’s network is directly relevant.

FCA Pre-Approval: The SMF11 Application

Under the rules in force today, the SMF11 appointment requires regulatory pre-approval through the same Form A application process as other SMF functions. At a dual-regulated firm the application goes to the PRA, which approves with the FCA’s consent; at an enhanced solo-regulated firm it goes to the FCA. The regulators assess the candidate on honesty, integrity and reputation; competence and capability; and financial soundness. For SMF11 specifically, the competence assessment focuses on financial reporting and audit expertise: the regulator will look for evidence that the candidate has the knowledge and experience to provide meaningful independent oversight of the firm’s financial reporting, internal audit function and external auditor.

The application should include a clear narrative of the candidate’s financial reporting and audit experience: specific roles, specific responsibilities, specific examples of audit committee governance work. Candidates who present a strong general governance background without specific financial reporting depth will face questions about their SMF11 competence. Preparing the application narrative carefully, with the firm’s legal counsel, is as important as identifying the right candidate.

The six-year regulatory reference requirement applies to SMF11 as to all SMF functions. Regulatory references from prior employers must be obtained and reviewed before the application is submitted; since PS26/6, firms asked for a reference must respond within four weeks rather than six. The statutory deadline for the regulator to determine a complete application is three months (six months where it is incomplete), and requests for further information can lengthen the process in practice. Our guide on how long FCA SMF approval takes sets out a realistic plan, and the SMF Roles guide covers the full application and regulatory reference framework.

The Proposed Move from Pre-Approval to Notification

The biggest regulatory change on the horizon for the audit chair is procedural rather than substantive. In CP26/37 the FCA proposes that SMF10, SMF11, SMF12 and SMF14 at dual-regulated and enhanced firms move from pre-approval to notification, describing them as oversight and assurance roles that do not usually carry day-to-day executive control. The PRA makes a parallel proposal in CP14/26. Both papers were published on 22 October 2026 and the consultation runs to 22 January 2027.

It is important to be clear about what this would and would not change. Under the proposals, a notified SMF would face the same substantive requirements as an approved SMF: the firm would still have to vet the candidate and complete a full fitness and propriety assessment, and would notify the regulator after that assessment, up to three months before the start date. Notified SMFs would be shown separately on the Financial Services Register, the Senior Manager Conduct Rules would still apply, and both regulators would keep a power to require pre-approval in exceptional cases. The FCA expects to publish final rules in the first half of 2027, with implementation around six months later; the PRA’s timing depends on the passage of the Financial Services and Markets Bill and HM Treasury’s commencement of the related legislative changes.

For a firm appointing an audit chair now, three practical points follow:

• Plan on pre-approval. Any appointment starting before the new rules are in force still needs a Form A and approval. Do not build a timetable on a regime that has not been finalised.
• The burden moves to the firm. If notification comes in, the regulator’s assessment no longer acts as a backstop. The firm’s own due diligence on competence, independence and regulatory history becomes the main control, and the firm will own the consequences of a weak appointment.
• Accountability does not shrink. The audit chair would remain a Senior Manager with a Statement of Responsibilities and the duty of responsibility. Candidates should not treat notification as a lighter-touch role.

Firms with a view on the proposals, particularly on how notification should work for audit chairs at smaller enhanced firms, can respond to either consultation before the January deadline.

The SMF11 Candidate Profile

The Chair of the Audit Committee candidate pool at a UK regulated firm requires a specific combination of accounting expertise, audit committee experience and regulated firm governance knowledge that is genuinely scarce at senior NED level.

Professional accounting qualification. ACA, ACCA or an equivalent qualification is the standard expectation. The qualification provides the technical foundation for the financial reporting and audit challenge that the role requires. Candidates without formal qualification who have equivalent experience (former CFOs with extensive external audit management experience, for example) may be appropriate but require more detailed competence assessment and may face a longer regulatory review.

Prior audit committee experience. Candidates who have served on or chaired audit committees at comparable regulated firms are the most directly qualified. Their familiarity with the committee process, the auditor dynamic and the financial reporting governance requirements reduces the onboarding period and the governance risk in the early months.

Financial services sector knowledge. Regulated firm financial reporting (capital adequacy reporting, fair value measurement of financial instruments, provisioning for credit losses, insurance liability valuation) requires sector-specific accounting knowledge that is different from general corporate financial reporting. Candidates from non-financial services backgrounds will face a steeper technical learning curve and should be assessed carefully on their knowledge of the sector’s accounting and regulatory reporting specifics.

Independence. As with all SMF NED functions, genuine independence from management is expected. The Code’s independence tests (no employment with the firm within the last five years, no material business relationship within the last three years, no close family ties with directors or senior employees, no significant shareholder representation) must be assessed and documented before the appointment is offered.

Relationship with the CFO and Finance function. The Chair of the Audit Committee’s most important day-to-day relationship is with the Finance Director or CFO. The Chair needs to be able to engage substantively with the CFO’s financial judgements, providing genuine challenge without creating an adversarial dynamic that undermines the finance function’s effectiveness. The best Chair-CFO relationships are characterised by mutual respect and candour; the worst are characterised by either deference (the Chair accepts whatever the CFO presents) or conflict (the Chair’s challenge is perceived as personal rather than governance).

Where SMF11 Talent Comes From

The SMF11 candidate pool draws from three primary backgrounds. Former CFOs and Group Finance Directors at regulated firms who have moved into NED careers are the most directly qualified: they bring deep financial reporting knowledge, regulated firm accounting experience and an understanding of the CFO’s perspective that makes their audit oversight particularly effective. Retired or senior partners from audit practices (Big Four and major mid-tier firms who have led financial services audit teams) bring external audit expertise and technical accounting depth, although recently retired partners from the firm’s own auditor will not meet the independence tests. And established audit committee NEDs from comparable regulated firms who are willing to take on an SMF-designated chair role at a new firm.

The cross-portfolio opportunity with Accountancy Capital is most directly relevant for the first group: former CFOs and Finance Directors with ACA or ACCA qualifications who are building NED portfolios. Accountancy Capital maintains a network of ACA-qualified senior finance executives, many of whom are at the career stage where audit committee NED opportunities are the natural next step. Our wider financial services non-executive recruitment work covers the third group.

Running the SMF11 Search

SMF11 searches require the same regulatory due diligence framework as all SMF NED appointments: regulatory history review before shortlisting, independence assessment before offer, and Statement of Responsibilities preparation with legal counsel before engagement. The specific additional dimension for SMF11 is the financial reporting and audit competence assessment, which should be a structured conversation, not just a credentials review.

The assessment conversation should include specific questions about: the candidate’s experience of managing the external auditor appointment and remuneration; a specific example of an audit committee challenge to a significant accounting judgement; the candidate’s approach to going concern assessments; and their experience of material internal audit findings and management’s response. These are concrete assessments of audit committee competence, not governance philosophy discussions.

Board chair and CEO involvement in the final stage assessment is essential, as for all SMF NED appointments. The SMF11 holder works within the board’s governance structure and needs the board chair’s genuine confidence as well as formal approval. The overall timeline runs from search opening through offer, notice period and regulatory approval, and the regulatory stage alone can take up to three months for a complete application, so firms should start the search well before the incumbent’s term ends.

Audit Chair Interview Questions

The interview is where a credentials-led shortlist becomes an assessment of judgement. The questions below are designed to test whether a candidate can do the job, not whether they can describe it. Ask for specific examples and follow up on the detail; strong candidates will name the judgement, the numbers involved in general terms, what they challenged and what changed as a result. Our general guide to NED interview questions covers board fit and behaviours; these focus on the audit chair’s technical brief.

Financial reporting judgement

• Tell us about a significant accounting judgement where you disagreed with management. What was the issue, how did you test it, and where did it end up?
• How do you approach a going concern assessment at a regulated firm where capital and liquidity headroom is tight?
• Walk us through how you would review an expected credit loss model (or, for an insurer, reserving assumptions) as a non-executive.

External audit

• How do you judge whether an external audit has been a quality audit rather than a compliant one?
• Describe an audit tender you have run or overseen. What criteria mattered most and how did you weigh audit quality against fee?
• What would make you refuse a non-audit service from the audit firm?
• What do you want to hear from the audit partner in the private session, and how do you get it?

Internal audit and controls

• How have you protected the independence of a Head of Internal Audit who reports administratively to the CFO?
• Give an example of an overdue internal audit action you escalated. What did you do when management missed the revised date?
• How would you help the board decide which controls are material for a Provision 29 declaration, and what evidence would you expect before the board signs it?

Regulatory accountability

• What does the prescribed responsibility for internal audit oversight require of you personally, and how would you evidence that you discharged it?
• How do you split oversight with the risk committee chair on model risk, regulatory reporting and operational resilience?
• If the regulators move SMF11 to notification, what, if anything, would you expect to change in how you do the role?

Score each answer against a simple scale agreed in advance by the panel. A candidate who answers in generalities on the first two groups is unlikely to hold the role well, however strong their wider board experience.

Compensation and Time Commitment

SMF11 fees reflect the technical expertise required, the regulatory accountability carried and the time commitment involved, and audit chairs are usually paid a committee chair supplement on top of the base NED fee. Fee levels vary widely with firm size, complexity and ownership, so firms should benchmark against comparable regulated firms rather than rely on a single range; our guide to non-executive director fees in the UK sets out how fees are structured. The audit committee typically meets four to six times a year, with additional off-cycle meetings for significant accounting judgements, external auditor appointment reviews or material internal audit findings. Preparation time (reviewing accounts, reading management letters, engaging with the CFO and external auditor outside formal meetings) adds materially to the time commitment, and an active audit chair at a firm with a complex financial reporting environment should expect a commitment well above that of an ordinary NED seat, peaking around the year-end audit.

Common Hiring Mistakes

1. Appointing a governance generalist without accounting depth. The most consequential SMF11 failure. A Chair who cannot provide genuine financial reporting challenge, who defers to the CFO’s judgement on significant accounting estimates, who is unable to assess the quality of the external audit, or who does not understand internal control weaknesses is providing an appearance of oversight without the substance.

2. Failing to assess sector-specific accounting knowledge. Regulated firm financial reporting is technically distinct from general corporate accounting. Candidates from non-financial services backgrounds should be assessed specifically on their knowledge of the sector’s accounting and regulatory reporting environment before being presented to the board.

3. Not engaging Accountancy Capital for ACA-qualified candidates. The SMF11 candidate pool with the most directly relevant credentials (ACA-qualified former CFOs and Finance Directors building NED portfolios) is Accountancy Capital’s primary network. A search that does not engage this population risks missing some of the strongest candidates.

4. Neglecting the auditor relationship dynamic. The Chair’s relationship with the external auditor is as important as the Chair’s relationship with the CFO. The assessment should probe the candidate’s approach to managing the auditor relationship, not just their accounting knowledge.

5. Rushing the application timeline. The regulatory review of an SMF11 application, with its specific competence requirements, can take longer than for a NED SMF function where the questions are mainly about regulatory history rather than technical competence. Building adequate time into the application plan prevents governance gaps.

How Exec Capital Approaches SMF11 Appointments

Exec Capital runs SMF11 searches with regulatory due diligence embedded from brief stage, a specific financial reporting competence assessment built into the process, and a cross-portfolio relationship with Accountancy Capital for candidates whose primary credential is ACA or ACCA qualification. Combining Exec Capital’s regulated firm practice with Accountancy Capital’s qualified finance executive network gives broad coverage of the SMF11 candidate population. Every search is run by our specialist team, with Adrian Lawrence FCA overseeing each mandate. More detail on how we run committee chair searches is on our board appointments service page.

Adjacent SMF NED appointments that frequently accompany or follow the SMF11 hire include the SMF10 Chair of Risk Committee, the SMF12 Chair of Remuneration Committee, the SMF14 Senior Independent Director and the SMF9 Chair. For the full board governance context, the Board Construction Guide and the existing Audit and Risk Committee Chairs guide provide broader governance framework context.

The Audit Committee’s Role in Emerging Risk and Technology Governance

The audit committee’s governance agenda has expanded in recent years to encompass technology and data risk that was not traditionally within its scope. This reflects the increasing significance of technology to regulated firm financial reporting and the audit process, and the growing importance of data governance to the accuracy and completeness of the financial and regulatory information the firm produces.

Cyber security and the audit. A significant cyber incident can materially affect the firm’s financial statements, through direct losses, regulatory fines or reputational damage that affects going concern. The audit committee should ensure that the external auditor is considering cyber risk as part of the audit’s risk assessment, and that the internal audit function has cyber security within its annual review scope. The Chair should be equipped to engage with the auditor on how cyber risk has been assessed and what audit procedures have been designed to address it.

Artificial intelligence in financial reporting. Regulated firms are increasingly using AI and machine learning in processes that feed into financial reporting: credit scoring models that determine provisioning levels, automated reconciliation tools and AI-assisted regulatory return preparation. The audit committee’s oversight of internal controls over financial reporting needs to encompass these AI-driven processes: what are the controls over the models, how are model outputs validated, and what is the audit trail for AI-assisted calculations? The FRC has published material on the use of AI in audit and the regulators continue to set out their expectations on AI governance, so the SMF11 Chair should be building their understanding of these expectations now.

Data quality and regulatory reporting. For regulated firms, regulatory returns (capital adequacy reports, liquidity reports and ICAAP or ICARA documentation) are financial documents with the same governance implications as statutory accounts. The audit committee’s oversight of the internal control environment should encompass the data quality processes that underpin regulatory reporting, not just the statutory accounts. Regulatory reporting failures (inaccurate or late returns) can trigger supervisory engagement and, in serious cases, enforcement action. The SMF11 Chair is not directly accountable for regulatory reporting (that accountability typically sits with the CFO or a named executive SMF holder), but the audit committee’s oversight of the control environment extends to the systems and processes that produce regulatory outputs.

The Audit Committee’s Annual Effectiveness Review

Good governance requires the audit committee to conduct an annual effectiveness review: an assessment of whether the committee is functioning as intended and whether it is providing the oversight quality that the firm’s governance requires. The FRC’s guidance (now consolidated into its Corporate Governance Code Guidance) expects the committee to review its own performance annually, and the Code expects FTSE 350 boards, including their committees, to have an externally facilitated evaluation at least every three years.

The annual review should assess: the quality of the information the committee receives from management and the external auditor; the committee’s process for challenging significant accounting judgements; the effectiveness of the private meeting with the external auditor; the quality of the internal audit function’s work; and the committee’s own composition, specifically whether it has the financial expertise and sector-specific knowledge it needs. The Chair is responsible for leading this review and for presenting its conclusions to the full board.

Where the review identifies gaps in the committee’s expertise, in the quality of management information or in the external auditor’s challenge, the Chair is responsible for ensuring these are addressed. This might mean recruiting a committee member with specific expertise the current committee lacks, requesting improved reporting from management, raising auditor performance concerns formally, or recommending an external review of the audit arrangement.

Onboarding the SMF11 Chair

The Chair of the Audit Committee’s onboarding should begin with a structured financial deep-dive before the first board or committee meeting. The pre-appointment briefing should include: the most recent annual accounts and the external auditor’s management letter; the internal audit plan and the most recent internal audit reports; the current list of significant accounting judgements and management’s approach to each; the audit committee’s terms of reference; and any outstanding FCA or PRA correspondence relating to financial reporting or audit matters.

The Chair should also have a one-to-one meeting with the outgoing Chair (where one exists) to understand the history of key accounting judgements, the external auditor relationship and any audit committee concerns that are ongoing. This knowledge transfer prevents the new Chair from discovering in their first committee meeting that a significant issue has been building for months without any background context.

The Chair’s first interaction with the external auditor, preferably before the first committee meeting, should be substantive: a conversation about the auditor’s current risk assessment of the firm, their planned audit approach and any concerns they have about the control environment that they want the new Chair to understand. This conversation establishes the relationship and ensures the Chair has the context they need to lead the first committee meeting effectively.

The Audit Committee and External Audit Market Reform

The UK audit market has been the subject of sustained reform debate following a series of high-profile corporate failures, including Carillion, Patisserie Valerie and BHS, where the audit was seen to have failed to provide the independent assurance that investors and other stakeholders relied upon. The Kingman review of the FRC, the Competition and Markets Authority’s audit market study and the Brydon review all fed into the government’s 2021 white paper, Restoring trust in audit and corporate governance.

Several of the headline proposals have not become law. Mandatory joint audit for FTSE 350 companies, proposed by the CMA, was replaced in the government’s plans by a softer managed shared audit model that depended on legislation. Operational separation of audit and non-audit practices at the Big Four has been taken forward by the FRC through principles agreed with the firms rather than by statute. And the plan to replace the FRC with a new statutory regulator, the Audit, Reporting and Governance Authority (ARGA), depended on the Audit Reform and Corporate Governance Bill, which the government dropped in January 2026. The audit committee chair at a regulated firm needs to be current on what has and has not changed, and on its implications for how the audit relationship is managed and how the external audit is assessed.

The FRC’s revised UK Corporate Governance Code (published January 2024) introduced enhanced requirements for boards and audit committees on internal controls reporting: Provision 29 requires the board to make a declaration on the effectiveness of the company’s material controls (financial, operational, reporting and compliance) as at the balance sheet date. It is sometimes compared with the US Sarbanes-Oxley regime, but it is principles-based, the board decides which controls are material, and there is no requirement for external auditor attestation. It still places additional governance accountability on the audit committee chair and requires the committee to maintain a more rigorous assessment of internal control effectiveness than many have historically provided.

What the Audit Reform Changes Mean for the Audit Committee Chair

On 20 January 2026 the Department for Business and Trade confirmed that the government would not bring forward the Audit Reform and Corporate Governance Bill, which had been promised in the 2024 King’s Speech. As ICAEW reported, the government cited the cost to large companies. The practical result is that ARGA will not be created by that Bill, the FRC remains the regulator, and the Bill’s proposals fall away: extending public interest entity status to large private companies, giving the regulator powers to investigate and sanction directors (not just auditors) over financial reporting, and a statutory resilience statement and audit and assurance policy.

For the audit chair, it is just as important to be clear about what has not gone away:

• The Minimum Standard. The FRC’s Audit Committees and the External Audit: Minimum Standard was published in May 2023 for FTSE 350 audit committees, and the 2024 Code (Provision 26) asks all Code companies to report on the matters it covers on a comply or explain basis.
• Provision 29. The material controls declaration applies to financial years beginning on or after 1 January 2026. It came from the Code, not the Bill, so it is unaffected.
• Existing audit law. Mandatory tendering and rotation for public interest entities, the FRC’s Ethical Standard and its limits on non-audit services, and the FRC’s audit quality inspections all continue.
• Regulated firm supervision. For banks, building societies and insurers, the PRA and FCA have their own expectations of audit committees and of the external auditor’s relationship with supervisors, and these did not depend on the Bill.

In short, the audit chair’s job has not become easier. Directors will not face a new statutory enforcement regime from ARGA, but the voluntary and Code-based expectations have grown, and for regulated firms the SMCR already gives the regulators a direct route to the individual. Candidates who describe the dropped Bill as a reason to relax are telling you something about how they would approach the role. Our article on what every NED should know about UK corporate governance reform covers the wider board picture.

Provision 29 and the Audit Chair

Provision 29 is the most significant change to the audit committee’s workload in the 2024 UK Corporate Governance Code. For financial years beginning on or after 1 January 2026, the board must monitor the risk management and internal control framework, review its effectiveness at least annually, and report in the annual report: a description of how it did so; a declaration of the effectiveness of the material controls as at the balance sheet date; and a description of any material controls that did not operate effectively, with the action taken or proposed. For a calendar year-end company, the first declaration covers the year ending 31 December 2026, so this is now live work, not a future project.

The declaration belongs to the board, but in most firms the audit committee does the heavy lifting, often shared with the risk committee. The audit chair is typically expected to:

• lead the board’s discussion of which controls are material, using the firm’s principal risks as the starting point;
• agree the assurance map: what evidence comes from management, the second line, internal audit and, where engaged, external providers;
• set the threshold for a control that has not operated effectively, and decide how such failures are disclosed;
• ensure internal audit’s plan is aligned to the material controls, which in turn shapes what the committee needs from the Head of Internal Audit;
• make sure the declaration is consistent with what the external auditor has seen, even though the auditor is not required to give assurance on it.

Many regulated firms are not listed and so are not bound by the Code. Even so, listed banks and insurers are, many subsidiaries of listed groups follow it, and supervisors often treat it as the benchmark for good practice. When hiring an audit chair, ask candidates whether they have been through a controls declaration, at a UK company or under Sarbanes-Oxley, and what they would do differently. Practical experience of scoping material controls is now a differentiator in the candidate pool, and it is one reason the SMF11 brief should be written jointly by the board chair, the CFO and, where there is one, the chair of the risk committee.

Common Questions About the SMF11 Appointment

Can the board chair also chair the audit committee? No. Under Provision 24 of the UK Corporate Governance Code the chair of the board should not be a member of the audit committee at all, let alone chair it; the two roles have different governance purposes and the audit committee’s independence from the board chair is important for its effectiveness as an oversight body. Regulated firms that do not apply the Code should treat this as good practice rather than a matter of preference.

What is the minimum size for an effective audit committee? The Code recommends an audit committee of independent NEDs with a minimum of three members, or two at smaller companies. A two-member committee with a strong Chair can function, but the resilience of the oversight is limited if one member is absent or has a conflict of interest in a specific matter. Firms should plan for three members as the governance standard.

How often should the audit committee meet? A minimum of four meetings per year, aligned with the reporting and year-end audit cycle, is the usual minimum. Firms with complex financial reporting environments, active M&A activity or significant regulatory financial reporting obligations may need additional meetings. An exceptional meeting can always be called for a specific matter; the challenge is ensuring the regular cadence provides adequate oversight rather than leaving governance to accumulate between meetings.

What happens when the external auditor identifies a significant issue? The audit committee chair is typically the first board contact for a significant audit finding: a material misstatement, an internal control deficiency, or a modification or emphasis of matter in the audit opinion. The Chair needs to be available and accessible when such issues arise, and must be capable of forming an independent view on the significance of the issue and the adequacy of management’s response before presenting it to the full board. This reactive governance function is one of the most important and least predictable aspects of the role.

Further Reading and Authoritative Sources

The FRC’s audit committees resources, including the Minimum Standard, are the primary reference for UK audit committee practice; the former Guidance on Audit Committees has been consolidated into the FRC’s Corporate Governance Code Guidance. The UK Corporate Governance Code sets out the board-level expectations for audit committee governance at listed companies, which many regulated firms adopt as their benchmark.

ICAEW’s audit quality material for audit committee members provides practical guidance on how audit committee chairs can assess the quality of the external audit, one of the most technically demanding aspects of the SMF11 role. The FCA’s SMCR guidance and the prescribed responsibilities framework set out the specific regulatory accountability that the SMF11 holder carries, and PS26/6 sets out the Phase 1 changes in force since 24 April 2026.

For the accounting standards applicable to UK regulated firm financial reporting, IFRS Standards, particularly IFRS 9 (Financial Instruments), IFRS 17 (Insurance Contracts) and IAS 1 (Presentation of Financial Statements), are the primary technical references for the financial reporting judgements that the audit committee oversees. Professional body research, including ACCA’s work on audit committees, provides broader context on how audit committees are evolving.

Related Exec Capital guides: SMF Roles: A Complete Guide · SMF10 Chair of Risk Committee · SMF12 Chair of Remuneration Committee · SMF9 Chair Hiring Guide · Financial Services Executive Hiring · Audit and Risk Committee Chairs Guide

Frequently asked questions

Which firms need an SMF11?

Dual-regulated firms (banks, building societies, PRA-designated investment firms and insurers within the senior insurance managers regime) and FCA enhanced solo-regulated firms that have an audit committee. Core and limited scope solo-regulated firms do not have an SMF11; their audit committee chair, if they have one, is not a Senior Manager in that capacity.

Does SMF11 still need regulatory pre-approval?

Yes. FCA CP26/37 and PRA CP14/26 propose moving SMF11 to notification, but the consultation closes on 22 January 2027 and final rules are not expected until 2027. Until then, a Form A and approval are required before the individual takes up the role.

Did PS26/6 change the SMF11 role?

Not in substance. PS26/6, in force from 24 April 2026, changed process points such as criminal record check validity (extended from three to six months), periodic rather than event-driven SoR submissions and a four-week deadline for regulatory references. The audit chair’s accountability is unchanged.

Is ARGA replacing the FRC?

Not for now. The government dropped the Audit Reform and Corporate Governance Bill in January 2026, so ARGA will not be created through that legislation and the FRC continues as the audit and corporate governance regulator.

What does recent and relevant financial experience mean?

Provision 24 does not define it, but boards usually look for a professional accounting qualification plus current or recent senior experience in financial reporting, audit or finance leadership. For a regulated firm the experience should include the sector’s accounting, such as IFRS 9 provisioning or IFRS 17.

Can the SMF11 also chair the risk committee?

It is possible for one individual to hold more than one SMF, and some smaller firms combine audit and risk in one committee. At larger firms the regulators generally expect separate committees and chairs, and holding both roles concentrates a heavy workload and a significant amount of accountability in one person.

How long does an SMF11 search take?

It depends on the brief, the candidate’s notice period and the regulatory stage. The regulator has up to three months to decide a complete application, so the search should start well before the incumbent’s term ends, and a firm facing a gap should plan interim cover at committee level.