FSA and FRC extend cooperation and information exchange on audit issues
News types: Generic Announcement
Published: 17 January 2011
The new agreement will deliver a closer working relationship between the FSA and the FRC’s Audit Inspection Unit (AIU) and will enable both organisations to improve their oversight of the audits of authorised firms. The AIU operates a risk-based system of audit inspections and its scope has been extended recently to include all banks incorporated in the UK to better support markets and the prudential regulator.
The FSA and FRC will assist each other in the performance of their respective functions by providing timely information, subject to any legal constraints. Where information shared is subject to confidentiality undertakings both regulators will handle the information in accordance with those requirements.
Richard Thorpe, FSA’s accounting and auditing sector leader and Paul George, Director of Auditing at the FRC, have commented on the agreement.
Richard Thorpe said:
“Our recent discussion paper highlighted our concerns that some auditors may not be exercising sufficient professional scepticism in their approach to the audit of key areas of management judgement. The FSA relies on audited financial information to meet its regulatory objectives and it is imperative that we have confidence in the information provided to us – this MOU is a public statement of the way we will share information with the Audit Inspection Unit at the FRC. Sharing information with the FRC will go someway to mitigating our concerns.”
Paul George said:
“It is vital that audit serves the interests of the UK’s capital market by providing relevant and high quality information to prudential regulators as well as the market. This agreement ensures that the dialogue established during the financial crisis is both durable and meaningful. By working more closely with the prudential regulator we will enhance our collective ability to identify and correct weaknesses in the quality of audited information being provided to regulators and the market”.
Notes to Editors
- The FRC is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; securing the appropriate degree of protection for consumers; fighting financial crime; and contributing to the protection and enhancement of the stability of the UK financial system.