News June 2022 FRC publishes first of its kind professional judgement guidance for auditors

FRC publishes first of its kind professional judgement guidance for auditors

23 June 2022
The Financial Reporting Council (FRC) has today published comprehensive professional judgement guidance for auditors to improve how they exercise professional judgement. 
 
Professional judgement is key to high quality audit, however the FRC regularly identifies poor professional judgement as one of the most significant issues affecting audit quality.
 
The new guidance includes a framework for making professional judgements and a series of illustrative examples. If applied widely, the guidance will improve audit quality by enhancing the consistency and quality of professional judgement exercised by auditors.
 
The guidance will be of particular use for auditors and central technical teams but will also have wider interest for those interested in audit quality, such as audit committee members and investors.
 
The FRC's Executive Director of Regulatory Standards, Mark Babington said:
 

"Professional judgement is a fundamental requirement for high quality audit. Unfortunately the FRC's supervision and enforcement work regularly finds professional judgement has not been exercised effectively and consistently, undermining audit quality and trust in audited accounts.
 
The new guidance, which is the first of its kind by a regulator, sets out a clear framework for how auditors should exercise professional judgement to enhance audit quality."

The full report is available here.
 
The framework and illustrative examples are available as two standalone documents here and here respectively.
 
A link to the expectations paper is available here.
 

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