FRC makes Amendments to ISAs (UK) to reflect Changes in Ethics Code

Tuesday, July 25, 2017 Print Email
The Financial Reporting Council (FRC) has recently made amendments to ISA (UK) 250 Section A - Consideration of laws and regulations in an audit of financial statements. FRC also confirmed changes to other ISAs which included ISA (UK) 330 and ISA (UK) 505. These amendments in ISAs (UK) are a direct response to the changes made in International Code of Ethics by International Ethics Standards Board for Accountants (IESBA).

The changes made to ISA 250 are limited in scope and are basically designed to aid in providing accountants with a framework so that to assist them in identifying and addressing instances of non-compliance with relevant laws and regulations in the normal course of their work. The International Auditing and Assurance Standards Board (IAASB) made some minor changes in order to align the requirements of ISA 250 with those of the revised ethics code.

The FRC has said that the changes made will help in improving the clarity of the ISAs (UK). For instance, changes have been made to the definition of the term non-compliance in order to broaden the scope of the term so that it covers a wider range of circumstances contrary to the existing laws and regulations. The changes made and the revised standard itself are both supported by application material regarding laws and regulations that deals or addresses corruption, fraud,  bribery and money laundering, financing of terrorists and proceeds of crime.

In addition to the revised ISA 250, FRC also issued revised ISA (UK) 330 The Auditor’s Responses to Assessed Risks, and also made amendments to ISA (UK) 505 External Confirmations. All the three revised standards are effective to be applied for audits of financial statements for periods starting on or after December 15, 2017.

The revisions made have the effect of basically integrating the guidance related with obtaining bank reports for the purpose of audit into the auditing standards. As a consequence of the revisions, Practice Note 16 ‘Bank reports for audit purposes’ has been withdrawn by FRC from the date from which the standard will effectively be applicable to the audit of financial statements in the UK.

Source: ReadyRatios

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