"Two consultations, which have just been issued by BIS and the FRC, now clarify the applicability of the new EU Audit Regulation and Directive to smaller and non-quoted financial institutions. The definition of a "Public Interest Entity" is being extended from June 2016 to include all banks and insurance companies of whatever size, where as previously only PLCs and the largest financial institutions were affected. These new PIEs will be subject to the same re-tendering rules, prohibited non-audit services (NAS), 5 year partner rotation and auditor engagement with the audit committee as the largest PLC. From around 2019, they will also be subject to the 70% cap on NAS. This extension of the rules has passed many smaller financial institutions by.

Worse still, the EU Audit Regulation is law and fully applicable in the UK, so breach of these rules is a serious offence. June 2016 is now very close and new PIEs need to understand when the new rules affect them and how. It is quite possible that some will need to organise an audit tender during 2016 so as not to break the law. Audit Review can help. We have a range of services to help firms comply regardless of size and experience".

Audit Committee training

Audit Review undertake specific training projects for Audit Committees helping them understand the role of the Auditor, the Audit process and the impacts of Governance change.

Our training has recently evolved to meet the increasing responsibilities of Audit Committees as a result of

  • changes to the UK Corporate Governance Code
  • changes to disclosures in the audit report 
  • new responsibilities handed to audit committees‎ by the recent Competition Commission investigation into the UK audit market and the new EU audit regulation

It is aimed at enabling the Audit Committee to

  • conduct a detailed review of the audit
  • tender the audit
  • challenge the audit report and be satisfied with the justifications put forward by the auditor

All our training is tailored for individual Audit Committees.

Responding to the new Guidance on Audit Committees

Responding to the new audit report disclosures

Responding to the new Guidance on Audit Committees

The new Guidance more firmly places elements like fee negotiation and tendering of external audit under the Audit Committee's control. Our bespoke training will enable audit committees to meet these obligations

Enabling the Audit Committee to conduct a detailed review

  • how to obtain the evidence which the Audit Committee will need to assist in discharging their obligations under paragraph 4.35 of the Guidance that: 'at the end of the annual audit cycle, the Audit Committee should assess the effectiveness of the audit process'
  • understanding the component parts of the audit and how time and costs are allocated
  • appreciate how audit firms work with their local partnerships on an international audit
  • the importance of recovery rates
  • facilitating management response and evaluating feedback to ensure there is an effective working relationship and the audit is efficient
  • understanding common areas where audits become inefficient or ineffective
  • how to gain assurance that the audit fee is appropriate

Enabling the Audit Committee to tender the audit

  • involving all stakeholders
  • setting objectives
  • long-listing
  • running a fair and objective tender process
  • typical timings and key events
  • typical critical judgement factors
  • short-listing and presentation evaluation

Audit Review also provide a complete independent and objective service to conduct reviews and tenders of external audits using our proven processes. In this way we support Audit Committees with the independent resources and expertise they need to discharge their duties.

reviews | tenders

Responding to the new audit report disclosures

The FRC's revision to ISA 700 requires audit committees to have a good working knowledge of the audit process and, in particular, the following three areas

  • a description of the risks of material misstatement that were identified by the auditor and which had the greatest effect on
    - the overall audit strategy
    - the allocation of resources in the audit
    - directing the efforts of the engagement team 
  • an explanation of how the auditor applied the concept of materiality in planning and performing the audit
  • a summary of the audit scope, including an explanation of how the scope was responsive to the assessed risks of material misstatement and the auditor’s application of the concept of materiality, as disclosed in the auditor’s report.

Enabling the Audit Committee to challenge the audit report and be satisfied with the justifications put forward by the auditor

  • background to ISA 700
  • the audit process
  • risk identification
  • setting materiality levels
  • shareholder engagement
  • peer group comparison

For more detail on the new ISA700 and our commentary download our technical note

CONTACT US to discuss your specific training needs and how Audit Review can assist