Following its recent consultation, the Financial Reporting Council (‘FRC’) has published (on 28 September 2012) revised International Standards on Auditing (UK and Ireland), effective for audits of financial statements for periods beginning on or after 1 October 2012.
The changes reflect the proposals in the FRC’s paper, ‘Effective Company Stewardship: Next Steps’ (published in September 2011), as well as the changes to the UK Corporate Governance Code and Guidance for Audit Committees effective 1 October 2012 (reported above). The revisions to the Standards aim principally:
- to enhance auditor communications by requiring auditors to notify the audit committee of any information the auditor considers the committee will need to understand the significant professional judgments made in the audit; and
- to extend auditor reporting by requiring auditors to report if the board’s statement that the annual report is fair, balanced and understandable is inconsistent with the auditor’s findings, or if the matters disclosed in the audit committee’s report do not appropriately deal with matters notified by the auditor to the committee.
The revised Standards are as follows:
- 260 Communication with those charged with governance;
- 700 The auditor’s report on financial statements (Revised);
- 705 Modifications to the opinion in the independent auditor’s report;
- 706 Emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report; and
- 720A The auditor’s responsibilities relating to other information in documents containing audited financial statements.
FRC Press Release PN011, 28 September 2012, (with links to the revised Standards) available at: