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FRC approves adoption of two new auditing standards for use in the UK

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02 Nov 2016

The Financial Reporting Council (FRC) has approved the adoption of two new auditing standards: ISA (UK) 800: Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (ISA 800) and ISA (UK) 805: Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement (ISA 805).

In July 2016 the FRC issued a consultation paper addressing plains to adopt ISA 800 and ISA 805 in the UK. This was in response to the Prudential Regulation Authority’s (PRA’s) proposed requirement for mandatory external audit of elements of Solvency II public reporting in the insurance sector.

Following the feedback received, the FRC now propose the adoption of ISA 800, with one modification, and ISA 805, with no modifications, for periods beginning on or after 1 January 2017. Early adoption is permitted and there is a transitional provision in place to allow auditors carrying out audits of regulatory returns for periods commencing prior to 1 January 2017 to use ISAs 800 and 805 in conjunction with the ISAs UK and Ireland (which they would be using for the statutory audit of financial statements for those periods). The modification to ISA 800, in response to feedback received from stakeholders, is to insert a requirement for audit reports to make an explicit statement about the applicable financial reporting framework in place for engagements of this type.

Click here to access the FRC’s Feedback Statement and Impact Assessment (link to FRC website).

Click here to access ISA 800 (link to FRC website).

Click here to access ISA 805 (link to FRC website).

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