AUDIT’S WATCHDOG and the UK’s financial regulator have signed an information sharing agreement as part of a drive to improve the oversight of audit firms.
Following the publication of a joint discussion paper on the audit of financial institutions in June last year, the Financial Services Authority (FSA) and the Financial Reporting Council’s (FRC) Audit Inspection Unit have agreed to share information, subject to legal constraints, that will help both bodies address the concerns raised about the audit of banks during the financial crisis.
“This agreement ensures that the dialogue established during the financial crisis is both durable and meaningful,” said Paul George, director of auditing at the FRC. “By working more closely with the prudential regulator we will enhance our collective ability to identify and correct weaknesses in the quality of audited information being provided to regulators and the market.”
Pauline Wallace, head of public policy and regulatory affairs at PwC, backed the move but defended the profession against the FSA’s recent suggestion that it was not showing enough scepticism when signing off accounts.
“When it comes to professional scepticism, the FSA’s perspective appears to be different to the auditing profession’s,” she said.
“We view our role as one of ensuring management has appropriate robust evidence to support its assumptions – it is not for us to present an alternative view and try to get management to accept it as better than theirs.”