The Financial Reporting Council (FRC) is consulting on the adoption of International Standards on Auditing (ISAs) 800 and 805 in the UK, to help support auditors in providing assurance over public reporting in the insurance sector under Solvency II
The document seeks views on whether stakeholders believe it is appropriate adopt these ISAs or if there is an alternative approach to support the Prudential Regulation Authority’s (PRA) proposed audit requirement for public reporting in the insurance sector under Solvency II.
It also looks into whether there are any risks associated with this proposal, as well as if it would be appropriate to make UK specific adaptions to the standards.
The Solvency II Directive itself does not require the provision of independent assurance, however, national regulatory authorities can make this a requirement. The PRA has expressed a strong preference for this assurance to be based on ISAs.
Melanie McLaren, executive director of audit said: ‘The FRC is carrying out this consultation in order to support the provision of high-quality assurance over public regulatory reports, in order to underpin user confidence in the information they contain.
‘Based on our stakeholder engagement to date, we believe that auditors may have difficulty in accepting an engagement to audit Solvency and Financial Condition Reports in accordance with current ISAs (UK). This is because the current ISAs (UK) are designed for the audit of full sets of general purpose financial statements, rather than elements of special purpose reports.’
The consultation closes at 5pm on 3 October 2016.
