The Auditing Practices Board (APB) of the FRC has today issued for comment draft revised guidance for auditors on the application of auditing standards in the audit of financial statements of public sector bodies in the United Kingdom.

Richard Fleck, Chairman of the APB and a director of the FRC said,

“Following the publication of the clarified ISAs (UK and Ireland) in October 2009, there is a need to update the APB’s industry-specific Practice Notes currently in issue. This consultation draft of Practice Note 10 is the first of a number of consultation drafts to be issued over the next six months. While most of the changes to Practice Note 10 have been made to conform the Practice Note with the new ISAs (UK and Ireland) and a small number of changes in applicable legislation and regulations, the APB invites comments on any aspect of the guidance.”

The consultation draft of Practice Note 10 (Revised) may be downloaded from the Publications (Exposure Drafts) section of this website. The comment period ends on 9 April 2010.

1. The FRC is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. Its functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the FRC Board. The Committee on Corporate Governance assists the Board in its work on corporate governance.
2. The APB is committed to leading the development of auditing practice
   • To establish high standards of auditing;
   • To meet the developing needs of users of financial information; and
   • To ensure public confidence in auditing.
3. In October 2009 the APB issued a new suite of International Standards on Auditing (ISAs) (UK and Ireland) that are effective for audits of accounting periods ending on or after 15 December 2010.
4. The APB issues Practice Notes to assist auditors in applying auditing standards of general application to particular circumstances and industries. Practice Notes are persuasive rather than prescriptive. However, they are indicative of good practice.
5. The standards governing the conduct of an audit of financial statements in the public sector are a matter for the national audit agencies and certain regulators to determine. However, the heads of the national audit agencies in the UK have chosen to adopt the APB’s engagement standards and quality control standards as the basis of their approach to the audit of financial statements.
6. The revision of Practice Note 10 primarily provides guidance for auditors on their audit procedures when applying the new ISAs (UK and Ireland). It also takes account of a small number of legal and regulatory developments affecting public sector bodies in the United Kingdom since the current Practice Note 10 (Revised) was issued in January 2006.
7. The consultation draft of Practice Note 10 (Revised) issued today has been prepared with advice and assistance from staff of the national audit agencies and auditors of public sector bodies.
8. All press enquiries should be directed to: Jon Grant on 020 7492 2410.