FRC revises UK ISAs to reflect ethics code changes

The Financial Reporting Council (FRC) has issued a revision of ISA (UK) 250 Section A—Consideration of laws and regulations in an audit of financial statements, and conforming amendments to other ISAs (UK), in response to changes made to the International Code of Ethics issued by the International Ethics Standards Board for Accountants (IESBA)

The revisions are limited in scope, and are designed to provide a framework to support reporting by accountants where they identify non-compliance with laws or regulations in the course of their work. The International Auditing and Assurance Standards Board (IAASB) made minor changes to align ISA 250 with the requirements of the revised code.

The FSA says the changes help to improve the clarity of the ISA (UK). For example, the definition of non-compliance has been amended to cover a broader range of instances that are contrary to the prevailing laws or regulations. This is supported by application material on laws and regulations that deal with fraud, corruption and bribery and money laundering, terrorist financing and proceeds of crime.

The FRC has also issued revised ISA (UK) 330 The Auditor’s Responses to Assessed Risks, with conforming amendments to ISA (UK) 505 External Confirmations. In common with ISA (UK) 250, this is also effective for audits of financial statements for periods commencing on or after 15 December 2017.

The revisions to this standard have the effect of streamlining and integrating the guidance relating to obtaining bank reports for audit purposes into the auditing standards. Consequently, the FRC has withdrawn Practice Note 16 Bank reports for audit purposes in the United Kingdom from the date the revised standard is effective from. The templates for requesting bank reports will remain available for use on the British Bankers’ Association website (now UK Finance), where an auditor wishes to obtain such a report.

ISA (UK) 250 revised July 2017 is here.

 ISA (UK) 330 revised July 2017 is here.

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