FRC changes audit report standard
Auditors of listed companies will have to give a clearer explanation of the risks faced by their client under a revised standard that hopes to make audit reports more useful for investors.
The Financial Reporting Council (FRC) said that it has made a "significant" change to ISA 700 (UK and Ireland) 'The Independent Auditor’s Report on Financial Statements'. The revised standard will require auditors reporting on companies which apply the UK Corporate Governance Code to explain more about their work.
Since the financial crisis, shareholders have criticised audit reports for being hard to understand and for giving banks clean bills of health shortly before they collapsed.
There are also concerns about the quality of big-company audits. In May, the FRC, said it is reviewing director appointments in some FTSE 350 companies amid concerns that independence between auditors and companies is being undermined.
The revised audit standard requires auditors to...