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FRC Priorities

By Julia Penny

The FRC have announced its 2019/20 audit thematic review topics as well as the sectors and audit areas which will be particularly subject to scrutiny.

The thematic reviews for the period will cover:

• Audit Quality Indicators (AQIs)
• The use of technology in audits

The FRC will also publish the results of their thematic review “the auditors work on other information in the annual report” later in 2018, followed by a report on audit firm transparency reporting in the first quarter of 2019.

The priority sectors are those regarded by the FRC as particularly high risk from a corporate reporting and/or auditing perspective and they are as follows for 2019/20:

• Financial services, especially banks/lenders/insurers;
• Oil and gas (corporate reporting only);
• General retailers/retail property;
• Business support services;
• Construction and materials.

The areas of focus from an audit perspective will be:

• Going concern and the viability statement;
• The other information in the annual report;
• Long-term contracts;
• The impairment of non-financial assets.

Not unsurprisingly they will also be considering the impact of Brexit in terms of the selection of audits that they will review and the areas of work they will have more focus.

Although the FRC is only involved in the public interest entity market from a monitoring point of view, most of the areas about which they are concerned also affect the rest of the audit and accounts preparation market. Therefore, it is useful to ensure that you consider these key areas as potential indicators of risk for individual or groups of clients and adjust the audit work planned where necessary.

 

November 2018 

 

Disclaimer
This article is published with the understanding that SWAT UK Limited is not engaged in rendering legal or professional services. The material contained in this article neither purports, nor is intended to be, advice on any particular matter. This article is an aid and cannot be expected to replace professional judgment. SWAT UK accepts no responsibility or liability to any person in respect of anything done or omitted to be done by any such person in reliance, whether sole or partial, upon the whole or any part of the contents of this article.