Audit Policy

September 2023


  • Our upcoming event Shaping a future-proof corporate ecosystem: final programme and speakers confirmed
  • European Commission seeks to adjust EU SME definition for inflation
  • IAASB proposes a global standard for sustainability assurance
  • FRC inspections show continued improvement at largest audit firms

Feature story

Our upcoming event Shaping a future-proof corporate ecosystem: final programme and speakers confirmed

Accountancy Europe and the European Confederation of Directors Associations (ecoDa) will organise an in-person event in Brussels on 12 October 2023, at 10:00-16:50 CEST.

We will look into key areas influencing the corporate ecosystem’s resilience in a time of economic, geopolitical, technological and climate disruptions. With the main parties that play a role here – companies including their audit committees and shareholders, auditors, policymakers and supervisors – we will explore ways to collectively:

  • enhance quality of corporate reporting
  • meet the public interest entities’ (PIEs) needs through a diverse and resilient audit (assurance) market
  • strengthen companies’ resilience

The programme and a great line-up of speakers are available on the event webpage where you can also still register for the event.

EU developments

European Commission seeks to adjust EU SME definition for inflation

The European Commission (EC) launched a draft Delegated Act (DA) for stakeholder consultation on 13 September, proposing to increase the balance sheet and turnover thresholds in the 2013 EU Accounting Directive by an average of 25% to adjust them for inflation. This is a technical measure provided for by the Accounting Directive. The EC states that these size thresholds have remained unchanged since 2013 and that this will reduce the scope of companies having to comply with requirements on publication of financial statements, audit, as well as sustainability reporting.

The ‘final’ DA will be issued for the scrutiny of the European Parliament (EP) and the Council presumably later this year.

International developments

IAASB proposes a global standard for sustainability assurance

The International Auditing and Assurance Standards Board (IAASB) released the exposure draft of its International Standard on Sustainability Assurance 5000, General Requirements for Sustainability Assurance Engagements (ISSA 5000).

ISSA 5000 as proposed is a stand-alone, principles-based standard that will serve as a global baseline for sustainability assurance engagements. It is profession-agnostic and reporting framework neutral. It includes requirements and application material for both reasonable and limited assurance engagements.

The consultation is open until 1 December 2023 and Accountancy Europe has already started developing its comment letter.

Read more

Accountancy Europe responds to the IAASB’s proposed ISA 570: Going Concern

The IAASB proposed revisions to its International Standard on Auditing (ISA) 570: Going Concern. In our response, we welcomed the IAASB’s proposals enhancing auditors’:

  • risk assessment adaptability and agility
  • work effort in terms of considering the wider context in evaluating management’s assessment
  • communication in the auditor’s report and in general

We also raised our concerns regarding the proposals attempting to address issues that are within the remit of reporting standards as well as regarding the proportionality of the standard.

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Accountancy Europe responds to the PCAOB’s proposals regarding non-compliance with laws and regulations

The Public Company Accounting Oversight Board (PCAOB-US) proposed changes to its auditing standards to strengthen auditor requirements to identify, evaluate, and communicate non-compliance with laws and regulations, including fraud.

Our comment letter highlights that:

  • auditors can play a crucial role in tackling fraud and non-compliance with laws and regulations
  • auditors should continue focusing on non-compliance that could materially impact the financial statements
  • all parties’ roles in the corporate reporting ecosystem and the interactions amongst them need to evolve coherently

Read more

National developments

FRC publishes latest accountancy and audit facts and trends

The Financial Reporting Council (FRC) released its latest Key Facts and Trends report, offering the newest statistics and trends on the UK’s accountancy and audit scene.

The report shows, amongst other things:

  • continued growth in accountancy bodies’ membership, but fewer accountancy students
  • total (including audit) fee income increase by both Big Four and non-Big Four firms
  • the concentration of audits with the Big Four firms continued to reduce in the FTSE market

Read the full report

French technical guidance on limited sustainability assurance engagement now available in English

As informed in the previous issue of the Audit Update, the French audit regulatory authority High Council of Auditors (H3C) released a technical guidance on limited assurance over sustainability reporting. The guidance was prepared by a working group composed of representatives of H3C, statutory auditors and assurance providers.

The guidance is now available in English.

Read more

FRC inspections show continued improvement at largest audit firms

The UK FRC published its annual inspection and supervision results of the largest audit firms (BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars and PwC) in July.

Overall, 77% of audits inspected were deemed good or required limited improvement. This percentage reflects a year-on-year improvement spanning four years, with a 10% increase compared to the 67% recorded in 2020.

Some of the key points include:

  • continued improvement in audit quality at the Tier 1 firms
  • inspection results for largest company audits (FTSE 350) remain strong
  • BDO and Mazars’ results continue to be below their peers, but are improving. To raise audit quality, the firms need to take further action especially to tackle the level of recurring findings
  • the FRC will continue to hold firms to account and to share what good looks like
  • management and audit committees continue to have an integral role in the corporate ecosystem to drive high quality audits

Read more

News in brief



This curated content was brought to you by Júlia Bodnárová, Accountancy Europe Manager, Head of EU Audit Regulation, since 2017. You can send her tips by email and connect with her on LinkedIn.