Practice Note 10: Audit of Financial Statements and Regularity of Public Sector Bodies in the United Kingdom (PN 10) sets out how auditors of public sector bodies apply UKInternational Standards on Auditing (ISAs) to their audits of the financial statements. It also provides guidance on the approach to the audit of regularity (whether or not transactions are in accordance with the framework of authorities). The Practice Note has the status of a SORP and is approved by the Financial Reporting Council.
PN 10 was last revised in 2020 and the proposed amendments are intended to ensure the Practice Note is updated to take account of changes to ISAs (UK) and other developments in the auditing profession.
The Public Audit Forum (PAF) is keen to gather views on the proposed revisions from a range of stakeholders, including firms carrying out public sector audits and preparers of public sector financial statements.
Details of the consultation and how to respond may be found on the PAF website. The PAF seeks comments on the key proposed changes, including those on the determination of materiality levels; guidance on applying quality management and ethical standards; additional examples of inherent risk factors; the interaction between responsibilities for fraud and regularity; clarifications on going concern; and situations where a different materiality threshold may be set for the audit of regularity.
Oliver Simms, Manager, Public Sector Audit and Assurance at ICAEW, comments: “As public sector bodies deal with significant challenges from rising costs to tackling climate change, it is vital that public sector audit brings confidence to citizens that taxpayers’ money has been spent effectively.
“We encourage public sector auditors and accounts preparers to respond to the consultation on Practice Note 10 to ensure that auditors interpret auditing standards in a way that results in effective public sector audit that focuses on the areas of most risk.”
ICAEW will be responding to the consultation and is seeking views from members and other stakeholders. If you have any comments on the proposed revision to Practice Note 10, please let us know at firstname.lastname@example.org.
Consultation responses may also be submitted directly to the PAF by Friday 16 September 2022 and will be published unless otherwise requested.
For more information about audit in the public sector, visit ICAEW’s new UK public sector hub.
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