The Professional Oversight Board, a part of the Financial Reporting Council, today publishes its ‘Report to the Secretary of State for Business, Innovation and Skills for the year to 31 March 2009’.

Barbara Mills, Chair of the Oversight Board, said:

“The primary purpose is to report on our statutory oversight of the effectiveness of audit regulation by the professional accountancy bodies that we recognise for this purpose. We focused for 2008/09 on the examinations for the audit qualification set by each body and on the processes that the recognised bodies use to monitor the competence of audit firms, and in particular smaller firms. The bodies take their responsibilities extremely seriously and much of the regulatory practice we see is of a high standard. Nevertheless we have made substantive recommendations to some bodies, aimed in particular at strengthening the examinations.”.

She added that the Report also highlights certain issues arising from the 2008/09 direct monitoring, through the Board’s Audit Inspection Unit, of the quality of auditing of economically significant entities. She said:

“Our work in 2008/09 continues to support the view that the quality of auditing of major entities in the UK is fundamentally sound and that the firms have generally made good progress in addressing our findings in previous years. We have paid particular attention to how the firms are responding to the challenges arising from the financial crisis and the economic downturn. Whilst the full effects of the auditors’ actions will not be apparent until we have completed our 2009/10 cycle, our assessment of the actions the firms have taken to date is generally positive.”

The report also summarises the Board’s work to meet its other responsibilities, in particular for the oversight of the regulation by professional bodies of the actuarial and accountancy professions.
 

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 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:
   1. a statutory obligation to oversee the regulation of auditors by the recognised accountancy bodies; 
   2. the monitoring of the quality of the auditing function in relation to economically significant entities;
   3. independent oversight of the regulation of the accountancy profession by the professional accountancy bodies;
   4. independent oversight of the regulation of the actuarial profession by the professional actuarial bodies.
3. 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. The Chairman is Dame Barbara Mills DBE QC.
4. The Report was presented to Parliament by the Secretary of State for Business, Innovation and Skills and was ordered to be printed by the House of Commons on 20 July 2009. A soft copy can be downloaded from our web-site at: http://www.frc.org.uk/pob/publications/pub2030.html.  Hard copies are available from The Stationery Office.
5. Press enquiries should be directed to Paul George, POB Director, on 020 7492 2340.