The Auditing Practices Board (APB) has published a revision of Practice Note (PN) 16: ‘Bank reports for audit purposes in the United Kingdom’.

PN 16 summarises the protocol recently agreed between the UK accountancy profession and the British Bankers Association (BBA) regarding the process auditors use when requesting confirmations of balances, transactions or arrangements from the bankers of the entity being audited.

The revised PN 16 is effective for accounting periods commencing on or after 26 December 2007. This timing allows auditors and their clients time to gather additional information on account numbers that will be required in the future.

Richard Fleck, APB Chairman, said:

“Obtaining confirmation of bank balances is an important source of audit evidence, and I hope that auditors will find that the new process described in Practice Note 16 will improve the speed and accuracy of confirmations provided by banks. I am grateful to the BBA for their assistance in obtaining the agreement of banks for the updated procedures”.

Copies of the revised PN may be downloaded from the Publications (Practice Notes) section of this website. From early January 2008, hard copy booklets may be obtained (price £8 each post-free) from FRC Publications, 145 London Road, Kingston upon Thames, Surrey KT2 6SR. Telephone 020 8247 1264.

1. The Financial Reporting Council (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 Committee on Corporate Governance, 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 & Actuarial Discipline Board).
2. The APB is committed to leading the development of auditing practice in the United Kingdom and the Republic of Ireland so as to:
   • establish high standards of auditing;
   • meet the developing needs of users of financial information; and
   • ensure public confidence in the auditing process.
3. 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 even though they may be developed without the full process of consultation and exposure used for auditing standards.
4. PN 16: Bank reports for audit purposes – Interim guidance, issued in October 2006, is now withdrawn. PN 16 was first issued in 1998 and a first consultation draft of a revised version was issued for public consultation in October 2005. Due to ongoing discussions between the accountancy profession and the BBA and in anticipation of the forthcoming year end, in October 2006 the 1998 version of PN 16 was withdrawn, and the extant consultation draft was reclassified as Interim guidance for auditors.
5. For further information please contact Jon Grant, APB Executive Director, on 020 7492 2410.