FRC publishes audit quality report

No additional regulation proposed

The Financial Reporting Council is not proposing any additional legislation following its report on promoting audit quality, published last week.
It believes ‘a well informed market is the best regulator’. But a new taskforce will be convened to examine the issues surrounding the way audit fieldwork is undertaken.

The report follows a discussion paper published last November inviting comment. It outlines the approach the FRC proposes to take in response to the issues raised in the feedback. According to the report, many respondents thought financial reporting in the UK operates effectively at present and audit is fundamentally sound, although they welcomed the FRC’s initiative.

The discussion paper, entitled Promoting Audit Quality, generally covered the main drivers of audit quality and the main threats to it.

Those drivers have been developed into a framework that is being published as part of the report. This framework is intended to be ‘a dynamic concept’ that will be updated as and when appropriate, says the FRC.

FRC announces 3-month plans

The Financial Reporting Council (FRC) has announced it intends to publish its review of the Combined Code on Corporate Governance, along with any recommended achanges, before the end of the year.

In its quarterly report, it outlines expected developments before the end of the year, including publication of the final report of its Market Participants Group on choice within Britain’s audit market.

Furthermore, it intends to produce draft guidance of agreements which could limit auditors’ liability when working with public companies. This should become open to public consultation early next year, it states.

Chief executive of the FRC Paul Boyle said: “We are progressing well on implementing the projects included in our plan for 2007-08, working closely with our wide range of stakeholders.”

Last month it emerged Mr Boyle had been elected chairperson of the International Forum of Independent Audit Regulators. The forum was formed a year ago and represents audit regulators across 22 countries.