New APB guide covers ethical standards

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The Auditing Practices Board (APB) recently published its compendium, ‘Standards and Guidance 2012’, which sets out amendments to ethical standards that were issued in December 2011.

 The compendium includes the APB’s standards in issue at 1 January 2012, including:

  • International Standards on Auditing (ISAs) (UK and Ireland)
  • International Standard on Review Engagements (ISRE) (UK and Ireland) 2410
  • Standards for Investment Reporting (SIRs)
  • Ethical Standards for Auditors
  • Ethical Standard for Reporting Accountants.

It also includes selected practice notes and bulletins likely to be of broad current interest.’s financial reporting adviser Steve Collings suggested that the compendium should be consulted by members, as there have been a number of cases recently where auditors were reprimanded for failing to consider the ethical standards. “I think this is either because the standards are disregarded because attentions are devoted to the audit itself, or time constraints,” said Collings.

“The ethical standards are as important as the auditing standards themselves and firms need to be able to demonstrate compliance with them.  For example, many firms provide non-audit services to audit clients, so audit firms must be able to demonstrate that there are adequate safeguards in place such as separate audit teams, where practical, hot/cold file reviews of audit work and such like.”

When tendering for both audit/non-audit work, ES4 is clear that the audit fee cannot be “manipulated” (ie reduced) to secure the non-audit work. The audit fee charged must be representative of the skills, experience of the audit staff involved and the length of time it will take the firm to conduct the audit in accordance with the ISAs, he added.

The full compendium can be purchased for £58 from FRC Publications (tel 020 8247 1264), but the relevant standards are also available for download from the APB website.

Consultation paper: Also issued in February was a consultation paper covering ISA 700 ‘The auditor’s report on financial statements (revised)’; ISA 705 ‘Modifications to the opinion in the independent auditor’s report’; and ISA 706 ‘Emphasis of matter paragraphs and other matter paragraphs in the independent auditor’s report’. The deadline for comments is 31 May 2012.

About John Stokdyk

John Stokdyk is the global editor of AccountingWEB UK and


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