Keeping on top of FRC auditing developments

The FRC has written to larger firms this month, setting out areas on which audit firms should focus in order to achieve high quality audits consistently.

The key themes highlighted by the FRC in the letter are included below, along with signposting to existing ICAEW Audit and Assurance Faculty member resources which we hope are helpful to support our members in each of these areas:

Area of FRC challenge          

Audit and Assurance Faculty resources
Inappropriate levels of challenge of management around valuations, impairment assessments and provisions                                                                                     

The faculty has created an online hub on auditing estimates covering auditors’ responsibilities under auditing standards and practical challenges.                                                                                              

Lack of demonstration of professional judgement and scepticism

Read our September 2019 Audit and Beyond article on demonstrating professional scepticism. The faculty’s scepticism hub includes guidance, videos and our publication: Scepticism: the practitioners’ take                          

Inadequate planning 

Our 2019 article in Audit and Beyond tells you how to finesse your planning.

Late timing of audit work and insufficient resourcing

Read about getting it right first time in this 2019 Audit and Beyond article.  

    The FRC has also published its 2019 Developments in Audit report which reinforces its assertion that auditors need to improve their challenge of management.

    The audit of revenue is a theme of both of these FRC communications, and similarly, a focus area in ICAEW’s QAD reviews. QAD details suggested improvements to revenue testing in its Audit Monitoring Report 2019. Our October 2019 Audit and Beyond article also addresses how to get better at auditing revenue.

    The Faculty’s webinar on 24 October was led by Mark Babington of the FRC and was on Changes in audit regulation.

     

    If you’d like full access to Audit and Beyond articles and other faculty resources, please join our growing community of audit professionals here.