In recent weeks we have published a series of blogs about guidance published by the UK Financial Reporting Council to assist auditors with the audit process and help explain the purpose of audit to the public.
This is about as exciting as auditing gets, but the profession is waiting with bated breath (at least I am anyway) for the FRC’s next publication to assist SME auditors, in particular.
The FRC is expected to publish for consultation a new Practice Note (PN) to support auditors of SMEs. Many auditors will remember the (now withdrawn) Practice Note 26 ‘Guidance on Smaller Entity Documentation’, which was withdrawn seven years ago this month, as it had fallen out of date. Hopefully the new PN will become as well liked and used as PN 26 once was.
PNs are intended to assist auditors in applying auditing standards of general application to particular circumstances and industries and are regarded as persuasive rather than prescriptive. Practice Notes are designed to assist auditors in applying auditing standards of general application to particular circumstances and industries.
Even though they may be developed without the full process of consultation and exposure used for standards, PNs are well regarded among the audit profession as indicative of best practice.
The draft PN is expected to be available for consultation over the summer, and the final version should be published by Q4 of 2025.
The purpose of the PN will be to help auditors scale the International Standards on Audit (ISAs) to suit smaller and less complex entities. The ISAs are a framework of standards which ensure that financial statements are audited consistently and transparently.
The ISAs are designed to be scalable so that they can be applied proportionately to the size of the company audited but these scalability provisions aren’t consistently applied and aren’t always used properly.
Hopefully the new PN will assist with both objectives to achieve consistent and accurate application of the ISAs.
For audit cold file reviews and tailored training sessions explaining more about various topics like AML, Audit, FRS 102, please send a mail to john@jmcc.ie.
For more on engagement and representation letter templates and a variety of CPD webinars on money laundering and other accounting/audit related topics, please go to our website for:
- Our latest CPD Webinar on The Main Changes in Irish GAAP (recorded July 2024)
- Anti-Money Laundering Policies Controls and Procedures Manual (March 2022) — View the table of contents
- AML Webinar (December 2023) available here, which accompanies the AML Manual. It explains the latest legal AML reporting position for accountancy firms and includes a quiz. Upon completion you receive a CPD certificate for attendance in your inbox.
- Letters of engagement and similar templates—Please visit our website here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items bought together.
ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard. We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. Please contact John McCarthy FCA by email at john@jmcc.ie.
