New guidance for banking audit

Radical changes to regulation, accounting and auditing in the financial and banking sector due to the imminent inception of the UK’s new watchdog, the Financial Services Authority, means that accountants are facing a whole new set of rules with which to abide.

The book in its fourth edition – a Regulatory Accounting and Auditing Guide – written for bankers, accountants in financial services and practice, internal and external auditors as well as regulators provides comprehensive guidance on the changes taking place.

The Auditing Practice Board is also due to issue updated guidance for auditors this month.

Some of the new chapters included are credit derivatives, a complex but growing product, the internet, the impact of new and proposed accounting standards and money laundering.

John Hitchins, co-author and partner at PricewaterhouseCoopers, told AccountancyAge.com: ‘Getting it right all the time is getting harder.’

A clampdown on money laundering has become a top priority for governments and regulators since the 11 September terrorists attacks in the US. Finding ways of catching legal funds used for illegal activities, such as Osama bin Laden’s trust funds, is proving difficult.

Hitchins, who has 20 years experience in the banking sector, urged auditors to, ‘keep focused on the basis principles of good control’ in the face of a rise in new products that often banks’ management do not understand’.

The expansion of the audit procedure to include other aspects of a company and not solely financial information means demands on an auditor are growing.

Regulators and standards setters are also considering a forensic test to be included in statutory audit. The idea has met with much resistance not only from the auditing profession but also from companies mostly due to the increased costs it would bring.

Links

EU sharpens money laundering fight