The comment deadline for the BIS consultation on reforms to the regulatory framework for statutory audit has been extended from 19 February to 19 March 2015, offering a one-month extension for response, which includes the opportunity to come a stronger powers for the Financial Reporting Council (FRC)
The discussion document looks at the legislative and non-legislative changes, within the context of the new EU audit reforms, needed to improve standards for the audit of public interest entities; improve confidence in the independence of auditors; avoid excessive concentration in the audit market; and make audit reporting more informative.
One of the biggest changes under consideration would be a proposal to give the FRC more statutory powers under UK legislation, in order to meet EU requirements.
The current provision of powers to the FRC via the rules of the recognised supervisory bodies (RSBs) is not consistent with the concept of the single competent authority having ultimate responsibility for the regulatory tasks or with it having the ability to delegate tasks to other bodies.
BIS states that: 'We think the competent authority’s responsibilities, in particular in respect of inspections, investigations and discipline, and standard setting will need to be allocated directly in legislation. This would require a new statutory framework on audit regulation in these areas'.
The document also looks at the structure for regulation, oversight and standards, and takes into account the new European requirements; recent Competition and Markets Authority (CMA) measures and recommendations; and wider work underway to refine technical and ethical standards.
The discussion draft is available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/394374/bis-14-1285-auditor-regulation-discussion-document-on-implications-of-eu-and-wider-reforms.pdf