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The Financial Reporting Council has yesterday released a consultation on the adoption of International Standards on Auditing (ISAs) 800 and 805 in the UK. This document seeks views on whether stakeholders believe it is appropriate to adopt these ISAs or if there is an alternative approach to support the *Prudential Regulation Authority’s (PRA) proposed audit requirement for public reporting in the insurance sector under Solvency II. It also seeks views on whether there are any risks associated with this proposal, and whether it would be appropriate to make UK specific adaptations to the standards.

The ISAs provide a framework for the provision of reasonable assurance opinions by auditors on particular matters. In particular the FRC considers that their adoption could provide a framework for auditors in providing opinions on aspects of Solvency and Financial Condition Reports, as proposed by the PRA.

Melanie McLaren, Executive Director of Audit said,

“The FRC is carrying out this consultation in order to support the provision of high-quality assurance over public regulatory reports, in order to underpin user confidence in the information they contain. Based on our stakeholder engagement to date, we believe that auditors may have difficulty in accepting an engagement to audit Solvency and Financial Condition Reports in accordance with current ISAs (UK). This is because the current ISAs (UK) are designed for the audit of full sets of general purpose financial statements, rather than elements of special purpose reports.”

Comment on the consultation in response to this invitation to comment should be sent to:

James Ferris, Project Director, Financial Reporting Council
E-mail: AAT@frc.org.uk

The consultation closes at 5pm on 3 October 2016.

Notes to editors:

1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment.  We are the UK competent authority for audit and 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 enforcement arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
2. This consultation is in response to the *PRA’s proposed requirementfor mandatory external audit of elements of Solvency II public reporting in the insurance sector (Solvency and Financial Condition Reports). Solvency II is a new prudential regulation regime for the insurance industry, which came into effect from 1 January 2016. The PRA is currently consulting on proposals to require ‘reasonable assurance’ external audit opinions covering elements of Solvency II reports, and has expressed a preference for the use of International Standards on Auditing (ISAs). We believe it is in the public interest for these ISAs to be adopted in the UK in order to help support auditors in providing this level of assurance.
3. All Press enquiries should be directed to:

• Peter Timberlake, Head of Communications, on telephone: 020 7492 2397/ 07768 502332, or email: p.timberlake@frc.org.uk.
• Rita Carolan, Communications Manager, on telephone: 020 7492 2307/ 07428 149096 or email: r.carolan@frc.org.uk.
• Alana Sinnen, Communications Manager, on telephone: 020 7492 2395/ 07949 005526 or email: a.sinnen@frc.org.uk.

Related Resources

Consultation and Impact Assessment: Proposal to Adopt (in the UK) ISA 800 (Revised) and ISA 805 (Revised)