FRC issues revised auditing standards to enhance communications to audit committees and auditor reporting
News types: Guidance
Published: 28 September 2012
PN 011
The FRC has, following consultation, today issued revised International Standards on Auditing (ISAs) (UK and Ireland):
Read or download 260 Communication with those charged with governance (PDF)
Read or download 700 The auditor’s report on financial statements (Revised) (PDF)
Read or download 705 Modifications to the opinion in the independent auditor’s report (PDF)
Read or download 706 Emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report (PDF)
Read or download 720A The auditor’s responsibilities relating to other information in documents containing audited financial statements (PDF)
The revised standards are effective for audits of financial statements for periods commencing on or after 1 October 2012.
The revisions primarily give effect to proposals in Effective Company Stewardship: Next Steps published by the FRC in September 2011 and support changes to the UK Corporate Governance Code and Guidance for Audit Committees that have also been issued by the FRC today. The changes in the standards are mainly directed at:
The FRC has, following consultation, today issued revised International Standards on Auditing (ISAs) (UK and Ireland):
Read or download 260 Communication with those charged with governance (PDF)
Read or download 700 The auditor’s report on financial statements (Revised) (PDF)
Read or download 705 Modifications to the opinion in the independent auditor’s report (PDF)
Read or download 706 Emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report (PDF)
Read or download 720A The auditor’s responsibilities relating to other information in documents containing audited financial statements (PDF)
The revised standards are effective for audits of financial statements for periods commencing on or after 1 October 2012.
The revisions primarily give effect to proposals in Effective Company Stewardship: Next Steps published by the FRC in September 2011 and support changes to the UK Corporate Governance Code and Guidance for Audit Committees that have also been issued by the FRC today. The changes in the standards are mainly directed at:
- Enhancing auditor communications by requiring the auditor to communicate to the audit committee information that the auditor believes the audit committee will need to understand the significant professional judgments made in the audit;
- Extending auditor reporting by requiring the auditor to report, by exception, if the board’s statement that the annual report is fair, balanced and understandable is inconsistent with the knowledge acquired by the auditor in the course of performing the audit, or if the matters disclosed in the report from the audit committee do not appropriately address matters communicated by the auditor to the committee.
Bulletin 2012/1, which will be issued in the near future, provides a compendium of illustrative auditor’s reports on Irish financial statements.
Nick Land, FRC Board member and chairman of the Audit and Assurance Council, said,
“The revised standards have been designed to continue the FRC’s work on enhancing effective company stewardship and stimulate greater transparency about the judgments made by boards and auditors.
Adopting the clarified reporting ISAs (UK and Ireland) in the Republic of Ireland will enable Irish auditors’ reports to be more concise and more relevant.”
- Read or download Feedback statement Changes to ISAs (UK and Ireland)
- Read or download Feedback Statement ECS changes to ISAs (UK and Ireland)
Notes to editors:
- The FRC is responsible for promoting high quality corporate governance and reporting to foster investment. We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. We represent UK interests in international standard-setting. We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
- Auditor’s reports refer to “APB’s Ethical Standards on Auditing”. Although the Auditing Practice’s Board (APB) no longer exists, that reference remains correct, reflecting the title of the standards as published.
- In addition to the publication of these documents, the FRC is also today issuing its changes to the UK Corporate Governance Code and Guidance for Audit Committees.