{"id":7625,"date":"2021-07-19T14:53:06","date_gmt":"2021-07-19T14:53:06","guid":{"rendered":"https:\/\/confirm18.wpengine.com\/?p=7625"},"modified":"2023-11-02T16:17:40","modified_gmt":"2023-11-02T16:17:40","slug":"what-pending-audit-reforms-mean-for-you-and-your-auditor","status":"publish","type":"post","link":"https:\/\/confirm18.wpengine.com\/eu-en\/resources\/insights\/what-pending-audit-reforms-mean-for-you-and-your-auditor\/","title":{"rendered":"What pending audit reforms mean for you and your auditor"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">In March, the UK\u2019s Department for Business, Energy and Industrial Strategy (BEIS) published a consultation white paper on audit reform, <a href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/970676\/restoring-trust-in-audit-and-corporate-governance-command-paper.pdf\" target=\"_blank\" rel=\"noreferrer noopener\"><em>Restoring trust in audit and corporate governance<\/em><\/a>. The government\u2019s proposed reforms will impose weightier responsibilities on auditors, with the aim of improving overall audit quality. The consultation period ended on 8 July.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The paper incorporated many of the recommendations from recent reports, such as <a href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/767387\/frc-independent-review-final-report.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">the Kingman Review&#8217;s<\/a> proposals for a new regulator, the Audit, Reporting and Governance Authority. Sir John Kingman also advocated \u201ca duty of alert: a duty for auditors of Public Interest Entities (PIEs) to report viability or other concerns to the regulator\u201d. PIEs are organisations that are \u201c<a href=\"https:\/\/eur-lex.europa.eu\/legal-content\/EN\/TXT\/PDF\/?uri=CELEX:32013L0034&amp;from=EN\" target=\"_blank\" rel=\"noreferrer noopener\">of significant public relevance<\/a>\u201d because of their size or the nature of their business, and whose collapse can cause major socioeconomic fallout. This was true of Carillion, a textbook example of audit failure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The government has adopted the <a href=\"https:\/\/assets.publishing.service.gov.uk\/government\/uploads\/system\/uploads\/attachment_data\/file\/852960\/brydon-review-final-report.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Brydon review\u2019s<\/a> recommendation for \u201ca new, distinct professional body for corporate auditors\u201d, which will enable good practice to thrive. The aim is for all corporate auditors to have a core set of audit-specific skills and experience. These will reinforce their authority to provide appropriate challenge to company management, exercise professional scepticism, and look for \u201csigns of over-optimism, judgmental bias or possible fraud\u201d.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Department for BEIS intends to impose equivalent duties on company directors, legislating \u201cto require directors of PIEs to report on the steps they have taken to prevent and detect material fraud\u201d. <a href=\"https:\/\/www.confirmation.com\/eu-en\/index.html\" target=\"_blank\" rel=\"noreferrer noopener\">Confirmation<\/a> plays a pivotal role in this space. We provide a digital platform for auditors to verify a company\u2019s financial statements \u2013 they can quickly initiate requests and receive responses from validated institutions and authorised responders, such as banks and law firms. This eliminates the opportunities for fraud presented by paper, fax or email communications.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The evolving relationships between auditors, clients and service providers<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As a result of these reforms, the relationship between you and your auditor will change, creating mutual obligations to work cooperatively in the public interest. Auditors need to be \u201cobjective and provide findings and opinions unaffected by bias, prejudice, compromise and personal or corporate conflicts of interest\u201d. Companies, especially larger corporations, are required to act more sustainably and make their own financial reporting more transparent. This will empower investors, creditors and other stakeholders by giving them access to reliable and meaningful information on company performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, companies \u2013 their CFOs in particular \u2013 need to bear in mind that the confirmation process involves extremely sensitive and confidential data, such as bank account numbers, loan numbers and bank balances. In this context, Confirmation supports the highest level of security for all parties, providing reliable audit evidence that is maintained in a secure environment with end-to-end encryption. This enables auditors to reach sound and verifiable conclusions on the basis of \u201caudit procedures performed and relevant audit evidence obtained\u201d, as <a href=\"https:\/\/www.frc.org.uk\/getattachment\/bb473a98-e0b3-4065-8b8c-65e0c434c679\/ISA-(UK)-600_Revised-November-2019-With-Covers.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">the International Standard on Auditing (UK)<\/a> demands.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The experience of COVID-19 has intensified the speed of change, both in the use of technology and in working practices. It has prompted many organisations to rethink their traditional models and rely even more on technology in their strategic thinking. As Confirmation\u2019s Kyle Gibbons explained in a recent ICAEW webinar, <a href=\"https:\/\/vimeo.com\/545395324\" target=\"_blank\" rel=\"noreferrer noopener\"><em>Quality audits and the beginnings of a new audit era<\/em><\/a>, companies and their auditors need to develop close working relationships with tech service providers. They should be asking themselves: \u201cis the provider managing data robustly and ethically? Which providers am I going to work with, and will they give me better audit quality outcomes?\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Later in the same webinar, the panel emphasised the importance of the BEIS consultation. They saw it as a perfect opportunity for all those involved in the audit profession \u2013 auditors, clients, third parties, and service providers \u2013 to steer the reforms in positive and forward-thinking ways.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For more information on how Confirmation can streamline and digitise your audit, contact us today.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.eu.confirmation.com\/emea-book-meeting\" target=\"_blank\" rel=\"noreferrer noopener\">Book a meeting<\/a><\/div>\n<\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><em> <a href=\"http:\/\/www.eu.confirmation.com\/ukfinance\" target=\"_blank\" rel=\"noreferrer noopener\"><em>Confirmation<\/em><\/a> pioneered the idea of digital confirmations in 2000 and still leads the industry today. More than 16,000 audit firms, 4,000 banks and departments, and 5,000 law firms have put our platform to work. We span 170 countries and process more than one trillion dollars in confirmations each year.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In March, the UK\u2019s Department for Business, Energy and Industrial Strategy (BEIS) published a consultation white paper on audit reform, Restoring trust in audit and corporate governance. The government\u2019s proposed reforms will impose weightier responsibilities on auditors, with the aim of improving overall audit quality. The consultation period ended on 8 July. The paper incorporated [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":7628,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[38],"tags":[49,39],"class_list":["post-7625","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights","tag-audit","tag-audit-firm"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What pending audit reforms mean for you and your auditor - Thomson Reuters Confirmation<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What pending audit reforms mean for you and your auditor - Thomson Reuters Confirmation\" \/>\n<meta property=\"og:description\" content=\"In March, the UK\u2019s Department for Business, Energy and Industrial Strategy (BEIS) published a consultation white paper on audit reform, Restoring trust in audit and corporate governance. 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