The Professional Oversight Board, a part of the Financial Reporting Council, today publishes its Report to the Secretary of State for Business, Enterprise and Regulatory Reform for the year to 31 March 2007. This was the second full year in which the Oversight Board has exercised statutory responsibility for the oversight of audit regulation delegated to it by Order.

Paul George, Director of the Oversight Board, said:

“The primary purpose is to report on our oversight of audit regulation by those professional accountancy bodies which we recognise for this purpose. I am pleased to say that all the recognised bodies take their responsibilities extremely seriously and that much of the regulatory practice we have seen is of a high standard. That said, external monitoring is always likely to identify areas of relative weakness or where there is further room for improvement and the report includes examples of the main points we have made in our private reports to the recognised bodies.”

Now that the Oversight Board has been in existence for three years, the report provides an overview of our work since 2004, not only on oversight of audit regulation but also on the direct monitoring of the quality of major audits, and on wider oversight of the regulation of the accountancy profession. We consider that our work provides a substantial body of evidence that the quality of auditing in the UK is fundamentally sound, and that the regulatory changes introduced in the UK following the collapse of Enron, together with the responses by the professional accountancy bodies, audit firms and individual auditors, are proving effective.

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 Investigation and Discipline Board) and by the Council. The Committee on Corporate Governance, whose members are drawn from the Council, assists it in its work on corporate governance.
2. The Professional Oversight Board contributes to the achievement of the Financial Reporting Council’s own fundamental aim of promoting confidence in corporate reporting and governance. It has four main responsibilities:
   • a statutory obligation to oversee the regulation of auditors by the recognised accountancy bodies;
   • the monitoring of the quality of the auditing function in relation to economically significant entities;
   • independent oversight of the regulation of the accountancy profession by the professional accountancy bodies;
   • independent oversight of the regulation of the actuarial profession by the professional actuarial bodies.
3. The Chairman of the Professional Oversight Board is Sir John Bourn. He is the Comptroller and Auditor General.
4. The Professional Oversight Board is independent of the accountancy and actuarial professions. Its members have wide experience of business and the professions, the public sector, accountancy, auditing and actuarial work.
5. The Professional Oversight Board is required by the Companies Act 1989, as amended by the Companies (Audit, Investigations and Community Enterprise) Act 2004 to report each year to the Secretary of State, who lays the Report before Parliament. The Government laid this report before Parliament on 25 July.
6. All press enquiries should be directed to Paul George, Director of the Professional Oversight Board, telephone 020 7492 2340.