This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

ICAEW report highlights improvements in bank reporting and auditing

  • ICAEW (Institute of Chartered Accountants in England and Wales) (lt green) Image

06 Dec 2015

The Institute of Chartered Accountants in England and Wales (ICAEW) has published a report into bank audit. The report, which is set against the context of increased scrutiny of the performance of bank audits and bank financial reporting, indicates that “there have been significant improvements in bank reporting and auditing”.

The report is a follow up to the ICAEW’s 2010 publication Audit of banks: lessons from the crisis; which was published in response to the global financial crisis and identified a number of practical proposals which it believed would improve bank reporting, auditor reporting and the relationship between auditors and bank supervisors.  The improvements that have been identified are noted since the publication of the 2010 report.

The report highlights the following key areas of improvement:

  • A “clear improvement” in bank reporting led by the recommendations of the Enhanced Disclosure Task Force (EDTF) which seek to enhance bank disclosures and presentation of risk information.  Improvements have also been seen as a result of the Financial Reporting Council’s (FRC’s) requirement on boards for the annual reports as a whole to be fair, balanced and understandable, revised Pillar 3 public disclosure requirements issued by the Basel Committee on Banking Supervision and the introduction of IFRS 9 Financial Instruments that has introduced new disclosure requirements in addition to introducing changes to the way that financial instruments are measured.  The report also indicates that initiatives such as the updating of  International Standard on Auditing (UK and Ireland) 260 Communication with those charged with governance (ISA 260) by the FRC has highlighted the importance of clear, two way dialogue between the auditor and audit committee which is important to both good reporting by banks and an effective audit process.
  • Significant progress in the reporting about the work of auditors and audit committees.  Most significantly the FRC revision to ISA (UK & Ireland) 700 The auditor’s report on financial statements (ISA 700 revised) which enhanced the audit report by introducing a new requirement for auditors to discuss in their reports the key audit risks they considered, how they addressed them and how they considered materiality.  For audit committees, the changes to the UK Corporate Governance Code require audit committees to provide more details on the work they do including the key risks they considered.  These reports now provide information about the matters and risks considered by audit committees and auditors and the work they have undertaken to address these during the audit process.   
  • Better quality and more regular dialogue between bank auditors and supervisors, which had stopped working as effectively as it should have in the run-up to the financial crisis.

Recognising that there has been an improvement in bank reporting and auditing, the ICAEW comments:

The accountancy profession needs to continue challenging itself to ensure that bank stakeholders have the information they want and the assurance they need to instil confidence in the sector. This not only involves looking for continuing enhancements in the quality of reporting and auditing, but also a focus on relevance.

The report acknowledges that there have been improvements in bank reporting and auditing but stresses that continuous improvement should be sought to provide the information that bank stakeholders want and assurance that they need to instil confidence in the banking sector.  This will require responding to the concerns of regulators and also, among other things, addressing challenges such as technological developments.

The full report is available on the ICAEW website.

Related Topics

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.