The Auditing Practices Board (APB) has today published Revised Ethical Standards for Auditors (ESs), which become effective for audits of financial statements for periods commencing on or after 6 April 2008. This follows a review of the ESs by the APB which concluded that there is currently no need to make major changes to the standards, except for amendments which:

• are needed to comply with UK and Irish legislation that implements the EU Statutory Audit Directive;
• are required in order that the ESs continue to adhere to the principles of international ethical standards;
• add clarity to the existing standards and assist their implementation in practice.

The Revised ESs are available on the APB website at: http://www.frc.org.uk/apb/publications/ethical.cfm.  A feedback paper summarising the comments received on the APB’s October 2007 consultation paper and explaining the actions taken is available on the APB website at: www.frc.org.uk/apb/publications/exposure.cfm  

One of the particular issues on which the APB requested views in its consultation paper related to the period for rotation of the audit engagement partner on listed company audits. Responses demonstrate that there is not yet a consensus between auditors, corporates and investors on whether this should be extended from five years to seven years. The APB believes that a further period of dialogue with interested parties is needed on this topic. Accordingly the APB has decided to undertake further work on rotation periods together with addressing a small number of additional issues as a separate exercise later in 2008 and will consult on any resulting changes to the ESs.

Richard Fleck, Chairman of APB commented:

“Responses to the consultation paper supported the APB’s view that the Ethical Standards are proportionate to their purpose and working in practice. Accordingly the APB has concluded that it is not necessary to make significant changes to them. We had hoped to be able to obtain agreement on the appropriate rotation period for audit engagement partners on listed companies, but differences of view on this continue to exist and the APB does not believe that there is sufficient consensus to make a change to the current five year requirement at this time. However, the APB plans to explore this issue further alongside a small number of other issues, later in 2008.”

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 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 Committee on Corporate Governance.
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. All press enquiries should be directed to: Jon Grant on 020 7492 2410.