The FRC’s Audit and Assurance Bulletin sets out good practice in this area and notes that auditors have the same statutory reporting responsibility for the new strategic report as they have for the existing directors’ report. It also provides guidance on changes to the content of the directors’ remuneration report, including the requirement to report a single total remuneration figure for each director.

The bulletin covers the introduction of the strategic report; the option for companies to provide a stand-alone ‘strategic report with supplementary material’ instead of the previous option to provide a ‘summary financial statement’; amendment of the regulations that specify the information to be included in a quoted company’s directors’ remuneration report; changes in the requirements of the listing rules with respect to directors’ remuneration disclosures; and changes to ISA (UK and Ireland) 700 ‘The independent auditor’s report on financial statements’ made in 2012 and 2013.
 

The effects of the various developments on the auditor’s report of a company preparing accounts under the FRSSE and of a premium listed group are illustrated in two appendices to the bulletin. The FRC has withdrawn bulletin 2008/3, ‘The auditor’s statement on the summary financial statement in the United Kingdom’.
 

The FRC says it plans to update ISA (UK and Ireland) 720 to take account of these new auditor responsibilities, once the International Audit and Assurance Standards Board (IAASB) has finalised the revision of its equivalent standard. It will be consulting on this shortly.

Nick Land, FRC board member and chair of the audit and assurance council said: ‘Recent developments in UK company law, the UK listing rules and the audit standards affect both the auditor’s duties and the wording of auditor’s reports on the financial statements of companies.  The auditor is required to audit some but not all of the directors’ remuneration report. It is particularly important, therefore, that the auditor should clearly describe within its report which elements of the report that it has audited.’

The FRC’s bulletin is here: https://frc.org.uk/Our-Work/Publications/Audit-and-Assurance-Team/Bulletin-4-Recent-Developments-in-Company-Law-The.pdf