ICAS says FRC audit reforms don’t go far enough

ICAS HAS CRICITISED the Financial Reporting Councils audit reforms as not putting enough pressure on auditors to give their opinions on reports.

The institute was responding to a consultation document, published today, claiming that the change does not go far enough as auditors will only have to publish their opinion on the narrative section of an annual report if they believe it is not “fair and balanced”.

However, the Scottish Institute claims that auditors should give their opinion on the narrative front part of all annual reports.

“The proposal that auditors would only report by exception – in circumstances where they believe that the content of such reports is not fair, balanced and reasonable – fails to properly fill the assurance vacuum in this area,” said ICAS director of technical policy James Barbour.

“Research undertaken on behalf of ICAS revealed a genuine demand amongst investors for assurance on the narrative information contained in annual reports. We believe that this demand would be best satisfied by auditors being asked to opine on whether such information is deemed fair and balanced. Reporting by exception, we believe, does not place sufficient emphasis on an increasingly important part of corporate reporting.”

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