The European Commission (EC) published in July the analysis of the responses to the corporate reporting public consultation to which Accountancy Europe responded earlier this year. Find it at this link.
Some of the main points include:
The mentioned next steps do not give detail or timeline but indicate that the results of the public consultation will be reflected in any future EC initiative in this context.
In any future work, the EC will also consider the upcoming study by the Center for European Policy Studies (CEPS). The study will provide data and analysis to help the EC carry out an assessment of the current EU regulatory framework on audit, which has been in place since 2014.
The EC adopted on 25 July two new decisions (here and here) to extend the equivalence and adequacy of the US competent authorities, the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) in the field of statutory auditing for a further six years, until the end of July 2028. These decisions thus extend the current agreement, which was set to expire at the end of July.
The decisions will allow EU audit supervisors to continue cooperating with their US counterparts in overseeing the audit industry.
The European Securities and Markets Authority (ESMA) has completed the annual update of the European Single Electronic Format (ESEF) Reporting Manual.
It now includes technical guidance on the construction of a block tag and ESMA’s expectations for annual financial reports prepared in more than one language.
Issuers and software firms are expected to follow the guidance when preparing annual financial reports for 2022.
The International Auditing and Assurance Standards Board (IAASB) issued first-time implementation guide for International Standard on Auditing (ISA) 315 Identifying and Assessing the Risks of Material Misstatement. The guide focuses on the key changes made and aims to help stakeholders understand and apply the revised standard as intended.
ISA 315 is effective for financial statements audits for periods beginning on or after 15 December 2021.
The IAASB issued frequently asked questions for reporting going concern matters in the auditor’s report in accordance with extant ISAs.
The IAASB is in the process of revising ISA 570 Going Concern and an exposure draft is expected to be published in the first half of 2023.
The Financial Reporting Council (FRC) published in July a Position Paper setting out the next steps to reform the UK’s audit and corporate governance framework.
The paper follows the Government Response to the consultation on strengthening the UK’s Corporate Governance, Corporate Reporting and Audit Systems, including the creation of the Audit, Reporting and Governance Authority (ARGA), to take over from the FRC.
The FRC builds on the areas of the Government Response that fall within its remit, to provide advanced clarity for stakeholders on how the work of reform will be delivered ahead of government legislation. That work includes revising existing codes, strengthening auditing and accounting standards, setting expectations to drive behavioural change ahead of statutory powers, and the development of guidance to address issues set out in the Government Response.
The FRC published its annual inspection and supervision results of the largest audit firms (BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars and PwC). Overall, audit quality continues to improve at the largest audit firms and on the largest audits. 75% of audits inspected were good or required limited improvement (compared to 71% in 2021 and 67% in 2020).
However, the report also highlights that:
The Dutch Authority for the Financial Markets (AFM) published a study on collaboration of audit firms. The study looked at 16 audit firms and concludes that:
Read more here and download the study (in Dutch) here.This curated content was brought to you by Júlia Bodnárová, Accountancy Europe Senior Advisor since 2017. You can send her tips by email and connect with her on LinkedIn.