• ACCA welcomes proposed FRC move to give shareholders more information about the audit
• ACCA says proposals are ‘radical’

ACCA (the Association of Chartered Certified Accountants) has responded to the Financial Reporting Council’s (FRC) consultation on a revision to International Standard on Auditing (UK and Ireland) 700 The auditor’s report on financial statements.

UK members of ACCA’s Global Forum for Audit and Assurance debated the proposals and the views of its members are expressed in the response.

Welcoming the revision, David York, ACCA head of auditing practice said: “These proposals are part of the implementation of the FRC’s Effective Company Stewardship proposals.  The FRC wants auditors to explain in their report the major  risks of misstatement they identified, what they did about them and how they applied the concept of  materiality  in the audit.  This responds to calls from investors for information over and above the ‘pass or fail' auditor's opinion.'

“ACCA has consistently supported the wider international initiative of the International Auditing and Assurance Standards Board (IAASB) to make auditor reporting more responsive to these investor demands.  The FRC proposals can be regarded as aspects of 'auditor commentary', as proposed by the IAASB, so it is a contribution to the international debate as well as a national initiative.”

David York explained: “Let's not make any mistake, the proposals are radical.  No audit firm is making this sort of disclosure now.  Standards are leading change, not codifying what is already going on.  Investors are being asked to understand what the auditor says about complex issues such as materiality.  It is really important that auditors and their clients get this right or investors may be short changed.  We are calling on the FRC to allow time for education and proper consideration; it is not right to bring this in as is proposed for accounting years that are already well in progress.

David York concluded: “ACCA is disappointed that the FRC and the IAASB have not been able to move forward together on this. The FRC has a marked advantage because it is capable of steering both auditing and corporate governance, so change can be implemented quickly and uniformly; something that is not currently possible globally.”

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For more information, please contact:

Helen Thompson, ACCA Newsroom

+44 (0)20 7059 5759

+44 (0)7725 498654

helen.thompson@accaglobal.com

Notes to Editors

1. ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.
2. We support our 154,000 members and 432,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and more than 8,400 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.
3. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.