THE FRC has released a consultation on the adoption of International Standards on Auditing (ISAs) 800 and 805 in the UK.
The accounting watchdog is seeking views on whether stakeholders believe it is appropriate to adopt these ISAs or if there is an alternative approach to support the Prudential Regulation Authority’s (PRA) proposed audit requirement for public reporting in the insurance sector under Solvency II.
It also wants views on whether there are any risks associated with this proposal, and whether it would be appropriate to make UK specific adaptations to the standards.
The ISAs provide a framework for the provision of reasonable assurance opinions by auditors on particular matters. In particular the FRC considers that their adoption could provide a framework for auditors in providing opinions on aspects of Solvency and Financial Condition Reports, as proposed by the PRA.
Melanie McLaren, executive director of audit said: “The FRC is carrying out this consultation in order to support the provision of high-quality assurance over public regulatory reports, in order to underpin user confidence in the information they contain.
“Based on our stakeholder engagement to date, we believe that auditors may have difficulty in accepting an engagement to audit Solvency and Financial Condition Reports in accordance with current ISAs (UK). This is because the current ISAs (UK) are designed for the audit of full sets of general purpose financial statements, rather than elements of special purpose reports.”
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