Fiona Goh outlines the Financial Reporting Council’s new role and responsibilities for oversight of audit, and the changes behind it.
The implementation of the EU Audit Regulation and Directive (ARD) on 17 June 2016 has brought changes to the formal relationship between the Financial Reporting Council (FRC) as a regulator of statutory audit and the professional bodies whose members conduct statutory audits under the Companies Act 2006. The changes will be noticed by some members of the professional bodies who carry out statutory audits.
Prior to the ARD, the FRC’s responsibilities for oversight of audit were delegated to it by the secretary of state for business, innovation and skills. The FRC was responsible for the recognition and oversight of the accountancy bodies which were in turn – as recognised supervisory bodies (RSBs) – responsible for supervising the work of auditors and – as recognised qualifying bodies – for offering an audit qualification.
This meant that RSBs (such as ICAEW) monitored the quality of the audit work and operated procedures for the registration, monitoring and disciplining of auditors. The FRC carried out oversight visits to the RSBs to assess the effectiveness of these arrangements and reported back to the secretary of state. The FRC also provided to the RSBs independent monitoring of major audits and independent disciplinary arrangements.
This is an extract from an article in the July/August 2016 edition of Audit & Beyond, the magazine of the Audit and Assurance Faculty.
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