AUDITORS will be forced to ramp up their communication with audit committees and increase their reporting levels under revised standards announced by the FRC.
Revisions to the UK & Ireland International Standards on Auditing (ISAs) announced by the UK reporting watchdog require auditors to be more explicit about their activities in preparing company reports and to report, by exception, if the board’s statement that the annual report is fair, balanced and understandable is inconsistent with knowledge acquired by the auditor.
Auditors will also be required to report when matters disclosed in the report from the audit committee do not appropriately address matters communicated by the auditor to the committee.
Nick Land [pictured], FRC board member and chairman of the Audit and Assurance Council, said: “The revised standards have been designed to continue the FRC’s work on enhancing effective company stewardship and stimulate greater transparency about the judgements made by boards and auditor.”
Similarly, earlier this year the IAASB launched a consultation on standard-setting proposals to improve how and what auditors report, in which it proposed adding a new section to the auditors’ report whereby the auditor can call attention to matters important to the users’ understanding of the audited financial statements or the audit.
The revised standards are effective for audits of financial statements for periods commencing on or after 1 October 2012.
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The FRC's new disciplinary regime for public interest entities could see could see more frequent enforcement on more minor matters, write Taylor Wessing's Andrew Howell and Stephen Flaherty