News May 2015 FRC publishes feedback statement on the Regulation of Auditors of Local Bodies

FRC publishes feedback statement on the Regulation of Auditors of Local Bodies

18 May 2015

PN 25/15

The Financial Reporting Council (FRC) has today published Regulations and Guidance pursuant to its responsibilities under the Local Audit and Accountability Act 2014 and a feedback statement to Recognised Supervisory Bodies (RSBs) on the approval of key audit partners for local audit. Under the Act the Secretary of State has delegated most of his responsibilities for the oversight of the regulation of auditors of local bodies to the FRC.
 
These include:

  • inspecting the quality of the audits of the largest local public bodies and health bodies other than Foundation Trusts;
  • recognising professional bodies responsible for overseeing auditor activities;
  • setting specific statutory requirements for local auditors.

In July 2014, the FRC issued a consultation document seeking views on the way in which it should give effect to three specific responsibilities delegated to it under the Local Audit and Accountability Act 2014 i.e:

  • guidance on the recognition of individuals as key audit partners;
  • regulations for the keeping of the Register of Local Auditors;
  • regulations for local audit firms on the requirement to publish transparency reports.

The FRC has now published a feedback statement to this consultation together with the Guidance and Regulations.

Guidance to Recognised Supervisory Bodies on the approval of Key Audit Partners for local audit (PDF)

Feedback Statement: Regulation of Auditors of Local Bodies (PDF)

Local Auditors (Registration) Instrument 2015 (PDF)

Local Auditors (Transparency) Instrument 2015 (PDF)

 
Notes to Editors:

  1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.  We represent UK interests in international standard-setting.  We also monitor and take action to promote the quality of corporate reporting and auditing.  We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies. 

  2. The Local Audit and Accountability Act 2014 (the 2014 Act) introduces new arrangements for regulating auditors of local bodies in England (principally local authorities and health bodies other than Foundation Trusts), that will apply following the abolition of the Audit Commission.  In most respects these parallel the legal framework for company audits. Local bodies appoint private sector audit firms, which must be registered with a Recognised Supervisory Body (RSB), and subject to regulation by that body.  The Government laid an Order before Parliament on 16 June 2014 that delegates to the FRC certain responsibilities for the oversight of the regulation of auditors of local public bodies.  This includes the recognition, supervision and de-recognition of those accountancy bodies responsible for supervising the work of auditors or offering an audit qualification. Audit firms must be registered with, and subject to supervision by, an RSB and persons responsible for company audit work at a firm must hold a recognised qualification.

  3. The FRC is currently considering applications from professional bodies to be approved as Recognised Supervisory Bodies (RSB) for audit firms which plan to undertake local audit work when the new regime is fully implemented.