ICAEW's Audit and Assurance Faculty brings you the latest technical updates on developments in auditing and assurance, financial reporting, ethics and sustainability.
Audit and assurance
FRC launches campaign to support UK SMEs access audit services
29 January 2025
The Financial Reporting Council (FRC)’s campaign will be focused on examining how UK SMEs undertake financial reporting, use and access audit to access capital, and how auditors can apply auditing standards in a proportionate way to SME audits. As part of the campaign, a market study was launched on 3 February 2025. The FRC welcomes comments and evidence on the SME market by 25 April 2025.
FRC publishes Tier 2 and 3 audit firm inspection report
16 December 2024
The Financial Reporting Council (FRC) has published its 2024 inspection findings for Tier 2 and Tier 3 audit firms. A key finding was the quality disparity across some of the firms, particularly in the Public Interest Entity (PIE) sector.
FRC releases emerging findings from NHS audit market study
12 December 2024
Initial feedback on the Financial Reporting Council (FRC)’s market study into the audit market for NHS providers and Integrated Care Boards has identified concerns such as potential restraints on market capacity as well as limited auditor choice. The full report is expected to be published in Spring 2025.
PCAOB outlines 2025 inspection priorities
9 December 2024
The Public Company Accounting Oversight Board (PCAOB) has published a report setting out its priorities for the 2025 inspection cycle. Audits of public companies in the financial, real estate, and information technology sectors will be prioritised in the selection process and inspectors will continue to focus on areas posing heightened risk to audit quality including crypto assets and use of generative AI.
PCAOB issues deep-dive report exploring internal culture at audit firms
5 December 2024
The Public Company Accounting Oversight Board (PCAOB)’s report is based on an in-depth staff review of audit firm culture and over 150 interviews with partners at the largest US firms. The impact of centralisation and standardisation in firm processes as well as hybrid work environments on audit quality are among topics discussed in the report.
FRC publishes 2024 Audit Market and Competition Update
4 December 2024
The Financial Reporting Council (FRC)’s annual report has shown that, although the Big Four firms continue to dominate the UK audit market, challenger firms have grown their share of FTSE 350 audit engagements. The report also highlights the FRC’s progression on several competition-related initiatives with the operational separation of the audit and non-audit practices of the Big Four being a notable example.
Ethics
IESBA launches standard-setting project on accounting firm culture and governance
14 January 2025
The International Ethics Standards Board for Accountants (IESBA) has announced the launch of a project to develop a principles-based culture and governance framework for accounting firms that promotes a high standard of ethical behaviour across all their professional services. Views will be sought from stakeholders via a series of global roundtables in March and April 2025.
Financial reporting
FRC issues reporting guidance following revised UK Listing Rules
31 January 2025
FCA revisions to the UK Listing Rules made in July 2024 included removing the need for independent assurance on shareholder circulars. The Financial Reporting Council (FRC) has published a new staff guidance note which details how such changes may interact with FRC standards in relation to engagements performed by reporting accountants.
IPSASB issues amendments related to specific IFRIC interpretations
28 January 2025
The International Public Sector Accounting Standards Board (IPSASB) has issued amendments to its accounting standards (IPSAS Standards). The amendments result from efforts to align them with IFRIC (IFRS Interpretations Committee) interpretations of International Financial Reporting Standards (IFRS) to situations of uncertainty and ambiguity. The amendments are effective from 1 January 2026.
IFAC issues progress report on international standard adoption
14 January 2025
The International Federation of Accountants (IFAC) has released its 2024 Global Adoption Status Snapshot report which highlights notable progress in adoption of international standards by member jurisdictions.
FRC issues update on remit to support UK economic growth
10 January 2025
Responding to the Secretary of State for Business and Trade’s remit letter, the Financial Reporting Council (FRC) has published its annual update on what it has been doing to fulfil its remit during 2024 and its priorities to support UK economic growth in 2025. These five priorities aim to promote high standards of corporate governance, corporate reporting and audit in the UK while supporting the Government’s ambition for economic growth.
FRC publishes draft Strategy 2025-28
2 January 2025
The Financial Reporting Council (FRC) has published its draft three-year strategy for 2025-28 and accompanying draft Plan and Budget for 2025-26. The strategy highlights the FRC’s commitment to supporting UK economic growth and serving the public interest. An evolved approach to audit form supervision as well as a review of enforcement procedures are among the initiatives put forward.
FRC to assume governance of the Wates Principles for Large Private Companies
16 December 2024
The Financial Reporting Council (FRC) has announced that it will take over governance of the Wates Corporate Governance Principles for Large Private Companies. This follows the decision of the Chair of the Wates Principles Coalition Group, Sir James Wates CBE, to step aside from his role.
FRC consults on proposed amendments to FRS 101 Reduced Disclosure Framework
13 December 2024
The Financial Reporting Council (FRC) has launched a consultation on proposed amendments to FRS 101 Reduced Disclosure Framework. Proposals include a new exemption from some new requirements in IFRS 18 Presentation and Disclosure in Financial Statements and an amendment preventing qualifying entities from applying both FRS 101 and IFRS 19 Subsidiaries without Public Accountability: Disclosures. Comments are welcome until 7 March 2025.
IASB concludes technical work on Management Commentary
9 December 2024
The International Accounting Standards Board (IASB) has completed its technical decision-making on the revised IFRS Practice Statement 1 Management Commentary, which is expected to be published in the first half of 2025. The revised Practice Statement will serve as a comprehensive resource for regulators and companies, promoting greater global alignment in management commentary.
FRC issues updated suite of FRS 102 factsheets
27 November 2024
Reflecting the standard amendments set out by the 2024 Periodic Review, the Financial Reporting Council (FRC) has issued updated versions of existing factsheets on aspects of FRS 102 as well as three new factsheets addressing significant changes to the standard. This includes new versions of Section 20 'Leases' and Section 23 'Revenue from Contracts with Customers'.
Sustainability
FRC recommends actions to support development of the sustainability assurance market
5 February 2025
The Financial Reporting Council (FRC) has published its final report from its 2024 market study into the assurance of sustainability reporting. The key actions the report recommends include creating a unified regulatory regime consolidating standard setting, oversight and enforcement.
IFRS Foundation publishes guide helping companies apply general requirements of IFRS S1 when reporting only climate-related disclosures
30 January 2025
The IFRS Foundation has released a new guide, Applying IFRS S1 when reporting only climate-related disclosures in accordance with IFRS S2, aiming to assist companies in reporting only climate-related information using the International Sustainability Standard Board (ISSB) Standards.
IAASB and IESBA launch landmark standards and guidance to strengthen sustainability reporting and assurance
27 January 2025
The International Auditing and Assurance Standards Board (IAASB)’s ISSA 5000 and the International Ethics Standards Board for Accountants (IESBA)’s IESSA have been unveiled. Together, these provide a comprehensive, interoperable and global package of standards for assurance, ethics, and independence for sustainability assurance engagements.
IFRS Foundation to host stakeholder event to discuss guidance on disclosures about transition plans
24 January 2025
As part of its plan to produce a guidance document to support entities in the application of the transition plan-related requirements of IFRS S2 Climate-related Disclosures, the IFRS Foundation is organising a virtual stakeholder event on the 25 February 2025 to gather information. The deadline for registration to attend is 7 February 2025.
FRC reviews Climate-related Financial Disclosures by AIM and large private companies
21 January 2025
The thematic review published by the Financial Reporting Council (FRC) follows the first cycle of mandatory Climate-related Financial Disclosure requirements and has found inconsistency in the quality of their application. With its best practice examples and areas of improvement, the publication is intended to provide a benchmark for organisations to build upon.
Global Ethics Sustainability Standards certified by the PIOB and supported by IOSCO
17 January 2025
The International Ethics Standards Board for Accountants (IESBA)’s Global Ethics Sustainability Standards, including IESSA, have been certified by the Public Interest Oversight Board (PIOB). The International Organisation of Securities Commissions (IOSCO) has also issued a Statement of Support calling on its members to apply or be informed by the new standards.
New Guidance advances high-quality corporate sustainability reporting and assurance preparedness
19 December 2024
The guidance, Building Trust in Sustainability Reporting and Preparing for Assurance: Governance and Controls for Sustainability Information, is a joint publication by the International Federation of Accountants (IFAC) and We Mean Business Coalition (WMBC), in partnership with the Global Accounting Alliance (GAA). The guidance is intended to provide a roadmap for organising and improving governance and control systems, aligning sustainability and financial reporting, and addressing challenges in sustainability reporting.
IFRS Foundation Trustees propose updates to standard-setting handbook to reflect creation of the ISSB
19 December 2024
The IFRS Foundation Trustees have launched a consultation on proposed updates to the Due Process Handbook, last updated in 2020, to reflect the creation of the International Sustainability Standards Board (ISSB) in 2021. These updates ensure that the same rigorous, inclusive, and transparent standard-setting processes followed by both the ISSB, and the International Accounting Standards Board (IASB) are reflected in the Handbook. Comments are welcome until 28 March 2025.
UK Sustainability TAC recommends UK endorsement of IFRS Sustainability Disclosure Standards
18 December 2024
The UK Sustainability Disclosure Technical Advisory Committee (TAC) has recommended to the Secretary of State for Business and Trade that the first two IFRS Sustainability Disclosure Standards be endorsed for use in the UK. Other recommendations include that guidance be developed on IFRS S1 implementation to clarify how entities can align this standard with existing sustainability-related disclosure requirements under the current UK legal framework.
IOSCO launches Network to support its members in adoption of ISSB Standards
18 December 2024
The International Organisation of Securities Commission (IOSCO) has launched the Growth and Emerging Markets (GEM) Committee Network for Adoption or Other Use of ISSB Standards. This initiative aims to support the adoption of IFRS Sustainability Disclosure Standards (ISSB Standards) in emerging markets jurisdictions.
IASB updates Accounting Standards for nature-dependent electricity contracts
18 December 2024
The International Accounting Standards Board (IASB) has issued targeted amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures to help companies better report the financial effects of nature-dependent electricity contracts such as those allowing companies to secure their supply from wind and solar power. The amendments are effective for annual reporting periods beginning on or after 1 January 2026.