Lecture 3-Current Regulatory Framework for Auditing in the UK(PartII).ppt

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Current Regulatory Framework for Auditing in the UK (Part 2)
Lecture 3
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Current Regulatory Framework for Auditing in the UK
In the wake of Enron and , the UK government reviewed the regulatory regime for auditing and accountancy.
Also re-acting to Sarbanes-Oxley - inspection of listed
company audits by a new independent agency, the pany Accounting Oversight Board (PCAOB); independent setting of auditing standards; restriction of non-audit services to audit clients; and a requirement for greater engagement with the auditors by pany mittee.
Sc. 404
Current Regulatory Framework for Auditing in the UK
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Key post-SOX changes to financial reporting/auditing in the UK include:
FRC was given responsibility for setting auditing standards, setting ethical standards for auditors and conducting independent inspections of public interest audits;
FRC made changes to the bined Code for Corporate Governance (renamed the UK Corporate Governance Code in 2010) requiring much closer engagement between the mittee of pany and its auditors, thus creating a much more significant role for the mittee chairman in the audit process;
A further major change in the EU was the move to International Financial Reporting Standards (IFRS) in 2005 for the group accounts of panies listed on EU markets. IFRS, while described as principles-based, are nevertheless more rules-based that UK GAAP (in that detailed guidance is offered).
Current Regulatory Framework for Auditing in the UK (pre July 2012)
Financial Reporting Council1
Accounting
Standards
Board1
Auditing
Practices
Board1
Board for
Actuarial
Standards2
Professional
Oversight
Board2
Audit
Inspection
Unit2
Financial
Reporting
Review
Panel1
Accountancy and Actuarial Discipline Board2
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Current Regulatory Framework for Auditing in the UK (pre July 2012)
The Financial Reporting Council
The work of the FRC had been criticised of late, especially in light of the recent financial crisis:
‘The regulation of account