The Professional Oversight Board has today published its review of the first set of mandatory Transparency Reports produced by auditors of public interest entities.

Under the Statutory Audit Directive and the subsequent Statutory Auditors (Transparency) Instrument 2008, auditors of UK companies with securities traded on a UK regulated market are required to produce a Transparency Report in respect of each financial year starting on or after 6 April 2008.

The Statutory Instrument sets out certain mandatory information for inclusion in each report and this was supplemented in 2009 by recommendations from the Oversight Board on appropriate disclosures.

The review of the first set of mandatory Transparency Reports includes a detailed commentary on common themes across the reports, an update on the extent to which issues identified in last year’s review of voluntary reports have been addressed by the firms and an analysis of disclosures under each of the statutory requirements.

Dame Barbara Mills, Chair of the Oversight Board, said:

“Overall, we believe that the quality of this year’s reports is higher than that of the previous voluntary reports. However, the majority of firms could improve the quality of their disclosures in certain areas, particularly independence policies, financial information and international network arrangements. We remain of the view that firms could make more use of their transparency reports to distinguish between themselves and to compete on audit quality.

We will be pursuing the small number of firms who have failed to produce a transparency report by the statutory deadline to rectify the situation.”

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 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 Chair is Dame Barbara Mills DBE QC.
4. Press enquiries should be directed to Paul George, Director of Auditing and Director, Professional Oversight Board on 0207 492 2340.