The Auditing Practices Board (APB) of the FRC has today published a consultation draft of a revision of Practice Note (PN) 20: ‘The Audit of Insurers in the United Kingdom (Revised)’. The consultation period ends on 16 August 2010.

When finalised the guidance proposed in the consultation draft will apply to the audits of insurers for periods ending on or after 15 December 2010. The consultation draft updates the current guidance, which was issued in January 2007, to reflect:

• the issuance of the new ISAs (UK and Ireland) (which apply to audits of financial statements of insurers for periods ending on or after 15 December 2010); and
• changes in the legislative and regulatory framework.

The new ISAs (UK and Ireland) primarily improve the overall readability and understandability of the ISAs (UK and Ireland). The core guidance contained in the consultation draft is largely unchanged from the current guidance. However, new, enhanced or revised guidance has been included with respect to:

• Auditing Accounting Estimates, Including Fair Value Accounting Estimates and Related Disclosures.
• Evaluation of Misstatements Identified During The Audit.
• The Auditor’s Report (including the reporting of equalisation provisions).
• The illustrative examples of various regulatory auditor’s reports.

Richard Fleck, APB Chairman, said:

“The APB regards this Practice Note as providing important guidance for auditors of insurers. The issuance of the clarified ISAs has significantly improved the quality of auditing standards and those improvements are now reflected in the proposed revision to the Practice Note. The APB is grateful for the work of the Institute of Chartered Accountants in England & Wales in assisting with the development of this document."

A copy of the consultation draft may be downloaded from the publications section of the APB’s web site at: http://www.frc.org.uk/apb/publications/exposure.cfm.

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 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 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: Marek Grabowski on Tel: 020 7492 2435.