This will enhance the useability and informativeness of the audit and provide greater assurance to users of financial statements of listed companies that potential material misstatements have been properly assessed by the auditor to identify fraud and error.

The latest consultation will amend ISA (UK) 250 sections A and B covering the auditor’s consideration of laws and regulations during an audit, and the right and duty to report rules.

Under new rules, the Financial Reporting Council (FRC) said auditors will be expected to obtain reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error, arising from non-compliance with laws and regulations. This would cover tax law and regulatory frameworks established by prudential supervisors in the banking and insurance sector.