Part 3: Brexit and audit – auditing standards considerations
Brexit will have implications for a variety of auditing standards. Read our guide to help you navigate through those implications.
Some firms advise that Brexit issues should be considered as a "mandatory’" issue to be addressed during the audit, and therefore they are encouraging internal consultation on the technical aspects of Brexit as part of their quality control procedures.
This audit guide outlines Brexit implications for:
- ISQC 1 and ISA 220: Quality control
- ISA 570: Going concern
- ISA 560: subsequent events
- ISA 600: group audits
- ISAs 700, 701, 705, and 706: Auditor Reporting, KAM, Modifications, Emphases of matter
- ISA 720: other information
- Other ISAs
Brexit reference in audit reports
References to Brexit in some auditors’ reports currently being issued may take a number of forms, depending on the auditors’ evaluation of the impact of Brexit on the financial statements and the audit.
References may be in the form of "key audit matter" (KAM), "material uncertainty", "other matter" or "emphasis of matter" paragraphs.
This know-how guide deals with the issue in detail. The FRC’s October 2018 open letter to listed companies, which we believe is also relevant to smaller entities, refers to the need for companies to distinguish in their disclosures any specific and direct Brexit-related challenges to their business model and operations from broader economic uncertainties. The letter from the FRC is on its website.
In various reports on extended auditor reporting, ICAEW and the FRC have indicated that KAM in auditors’ reports should be specific to the entity and the sector in which it operates.
ICAEW’s Brexit guidance
This guide is part of a series intended to help auditors of SMEs deal with current Brexit-related uncertainties associated with a potential no-deal exit as they affect 31 December 2018 and 31 March 2019 audits. The series does not deal with the longer-term potential opportunities or risks associated with Brexit more widely.
Read the other guides
A range of other Brexit related resources is available in our Brexit hub.