Showing posts with label ISA (UK). Show all posts
Showing posts with label ISA (UK). Show all posts

Wednesday, August 11, 2021

Auditing and Assurance Standards in UK

Auditing standards are professional standards or requirements for the performance of an audit of financial statements. They include objectives for the auditor, together with requirements and related application and other explanatory material. Preparation of a uniform set of standards for auditing practice in UK was started back in March 1976 when the Auditing Practices Committee (APC) was established by the Consultative Committee of Accountancy Bodies (CCAB) to formalize the existing co-operation of the CCAB bodies on audit practices. At the time of its establishment the role of the Auditing Practices Committee was defined as:

“To provide a framework of practice for the exercise of an auditor's individual judgement, by proposing for the approval of the Councils of the governing bodies statements of explanation and guidance on auditing, and definitive statements of auditing standards.”

In 2004 the Financial Reporting Council (FRC) took over responsibility for the setting of audit standards through the Auditing Practices Board (APB) which became a subsidiary board of the FRC. The FRC was also charged with monitoring and enforcing these auditing standards. In the same year of 2004, the UK’s Auditing Practices Board (APB) took the decision to base UK and Irish auditing standards on ISAs. One of the reasons for this alignment was to benefit from future improvements to them.

New standards were issued by the International Federation of Accountants (IFAC) through the IAASB and were adopted in the UK in October 2009 as ISAs (UK), and apply to audits of financial statements for periods ending on or after 15 December 2010. Where necessary, the APB has augmented the international standards with a small number of additions to address specific UK and Irish legal and regulatory requirements. The FRC, in June 2016, stated that references to Standards (UK) have been amended to Standards (UK).

The Financial Reporting Council (FRC) is now the authorized body for setting auditing standards in the UK in accordance with the Companies Act of 2006 and Statutory Instrument on Statutory Auditors (Amendment of Companies Act 2006 and Delegation of Functions etc.) Order 2012 (SI 2012/1741). The Companies Act of 2006 establishes mandatory audit requirements (statutory audits) for all companies unless they qualify for exemptions based primarily on size, nature of activity and company type, or whether they are dormant.

To sum up the discussion, all financial statement audits in UK must be conducted in accordance with International Standards on Auditing (UK) issued by the FRC. The current International Standards on Auditing (UK) are based on the International Standards on Auditing (ISAs) of the same titles that have been issued by the International Auditing and Assurance Standards Board, published by the International Federation of Accountants, with some additions to account for UK Company law.

 

References:  

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