Public Confidence Targeted in New APB Practice Note
The Practice Note released by the Auditing Practices Board (APB) that contains revision of Practice Note 19 (The audit of banks and building societies in the United Kingdom) aims to enhance “public confidence in the audit process and the quality and relevance of audit services in the public interest.”
Richard Fleck, APB Chairman, said that while the updated Practice Note addresses new auditing standards, the Board also takes this as “an opportune time to enhance the guidance in relation to areas that were identified as being of particular interest in the credit crisis.”
The Practice Note will assist auditors in applying the requirements of ISAs (UK and Ireland) that apply to audits of financial statements for periods ended December 15, 2010 and for legislative changes. Also, other entities like consumer finance companies and their auditors are part of the Practice Note’s target.
It contains standards and guidance for reviews of interim financial information performed by the auditor of an entity; for the work of reporting accountants in connection with investment circulars; and standards and guidance for auditors’ and reporting accountants’ integrity, objectivity and independence.
The APB released an exposure draft related to the revised Practice Note on July 2010 seeking comments from the public.
“The APB intends to update the references to the FSA within Practice Note 19 at an appropriate time following the future restructuring of the FSA,” Fleck said.
Additionally, the APB extends the coverage of the revision to include relation to the audit of accounting estimates, impairment provisions and related disclosures, and bilateral and other periodic meetings between auditors and the FSA.
However, the revised Practice Note does not provide a ‘prescriptive’ guidance to bank audits and building societies, but rather a ‘persuasive’ guidance.
Practice Notes issued by the APB are intended to help auditors apply the standards in auditing to particular circumstances and industries.