The Auditing Practices Board today published a revised edition of SAS 24 ‘Quality control for audit work’ which will force auditors to comply with an extra round of internal analysis and independent reviews on all audits of UK quoted companies.
The revised standard will broaden responsibility of senior partners to ensure quality control of audits and become a sounding board for the auditor. Audit partners are to consider the objectivity and independence of the audit and for the first time will have to document the results.
Ian Plaistowe, chairman of the APB, said: ‘The APB believes that the changes it has made to SAS 240 will add rigour to quality control systems within firms of all sizes and, by requiring assessment and documentation of independence issues, will help ensure public confidence in this aspect of the audit process.’
Plaistowe criticised the US audit board’s continued push for a forensic phase to be included in the audit process, saying it would inflict massive costs on business. But, he added that the UK approach to auditing was much tougher than that of the US, which is based on a rulebook procedure.
It is understood that the APB has taken the initiative to revise these independence standards – untouched since 1995 – in a bid to stave off the adoption of US audit rules in the UK. ‘What happens in the US is likely to affect the rest of the world. It is likely that US audit rules will have more and more impact on the rest of the world,’ he said.
The APB also issued an exposure draft of a revision to SAS 610 ‘Communication with directors’ which aims to close the gap between directors and audit partners. Revised SAS 610 proposes to extended communication with audit committees of listed companies concerning auditor independence and objectivity.
Jon Grant, technical director, said: ‘The communication between audit committees and auditors is terribly important and will also help directors to understand their responsibilities. I am particularly interested in what directors think of the exposure draft.’
It is hoped the revised standard will encourage debate on the appropriateness of accounting policies, appropriateness of accounting estimates and judgements, potential effect of uncertainties, unusual transactions, adequacy of disclosures and balance and transparency of other information.
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