News December 2020 FRC launches consultation to revise UK quality management standards

FRC launches consultation to revise UK quality management standards

22 December 2020

The Financial Reporting Council (FRC) has today launched a consultation on the proposed revision of the standards for an audit firm’s responsibilities to design, implement and operate a system of quality management.

The FRC proposes to adopt International Standard on Quality Management (UK) 1 Quality Management For Firms That Perform Audits Or Reviews Of Financial Statements, Or Other Assurance Or Related Services Engagements and International Standard on Quality Management (UK) 2 Engagement Quality Reviews, and revise International Standard on Auditing (UK) 220 (Revised 2021) Quality Control For An Audit Of Financial Statements, to reflect recent revisions to the international standards on auditing issued by the International Auditing and Assurance Standards Board (IAASB ).

The changes introduce a new quality management approach that is focused on proactively identifying and responding to risks to quality. This new approach requires a firm to customise the design, implementation and operation of its system of quality management based on the nature and circumstances of the firm, using an integrated approach that reflects upon the quality management system as a whole. The FRC has strongly supported the IAASB’s work.

When finalised, the quality management standards are proposed to be effective, in line with the international standards, for audits of financial statements for periods beginning on or after 15 December 2022. Early adoption of the revised standards is strongly encouraged.

The FRC is not proposing to add any new UK requirements, given that the IAASB has sufficiently addressed matters raised by the FRC in its comment letter on the IAASB’s Exposure Draft.

The FRC is at the same time consulting on conforming amendments to other UK standards.

The consultation runs until Friday 19 March.

A link to the consulation and impact assessment can be found here.
 

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William BoyackCommunications Manager