The regulatory regime for companies auditing Public Curiosity Entities (PIEs) is altering. We have a look at new FRC registration necessities, plans to increase the definition of a PIE, and what audit companies want to contemplate now and in future.
From 5 December 2022, all audit companies and accountable people that wish to perform audits of PIE entities must be on the FRC’s PIE Auditor Register. The brand new register is a part of the federal government’s wider reform of the UK’s company reporting and audit regime, which is designed to enhance scrutiny and restore public belief. Different adjustments within the pipeline embrace increasing the definition of a PIE to cowl a wider vary of publicly vital corporations. Corporations that already audit PIEs are becoming a member of the FRC’s PIE register throughout a transitional interval, which has been underway since 5 September. This permits the 40 or so companies presently auditing PIEs to make a transitional software and develop into registered with none disruption to their current work. From 5 December, when the brand new scheme goes stay, any companies not on the FRC’s register that wish to tackle PIE audits – or that may come throughout the scope of the necessities when the PIE definition expands – must register and get FRC approval. The prevailing system, whereby all audit companies finishing up statutory audits should be registered with the Recognised Supervisory Our bodies (which embrace ICAEW), will proceed. However the brand new regime means these companies doing PIE audits can even want an extra FRC registration.
Keep conscious “The FRC has contacted companies that already audit PIEs, so that they’ve been advised what’s taking place and know the method they’ve bought to comply with,” says Elaine Griffiths, Director of Regulatory Follow and Coverage, ICAEW. However the brand new system additionally has implications past this cohort of companies. Different companies is perhaps affected in future and so have to maintain up-to-date with developments and take into account the way it may have an effect on their companies to present and potential shoppers. “Some companies might not essentially be specializing in this new regime as a result of they do not presently have PIEs as shoppers,” says Elaine. “However they might be drawn into it in the event that they want to audit a PIE in future, if considered one of their current audit shoppers is on the cusp of being a PIE, or as a result of the proposed new PIE definition brings a consumer inside its scope.” “The place companies aren’t conscious of this new registration requirement, they might inadvertently fall foul of the brand new rules,” she warns. “So that they want to pay attention to the brand new register and software course of, and that there will likely be a lead time for that,” she says. “The FRC’s course of requires you to be registered upfront of beginning an audit, so you should be on the FRC’s register earlier than accepting an audit for a PIE consumer.”
Two-way sharing ICAEW and the opposite Recognised Supervisory Our bodies have been working carefully with the FRC throughout the transition interval, and this may proceed. “The FRC’s group has commonly attended conferences of our Audit Registration Committee to offer updates and acquire suggestions,” says Elaine. “And if we have highlighted something that is perhaps unworkable, they’ve listened and responded.” Minimising disruption to companies and PIE shoppers has been a key precedence for the each the FRC and ICAEW. An instance of that is that the FRC is aligning the date of the annual return it requires underneath the brand new regime with when ICAEW asks a agency for its annual return knowledge. “So, in idea, companies would simply be collating knowledge yearly and giving that to us and the FRC,” says Elaine. “We have additionally up to date our contractual association with the FRC,” she provides. “And, as a part of this ‘delegation settlement’, there’s a registration protocol.” “This units out the obligations that now we have to share info with the FRC and likewise what it shares with us,” she says. For companies on the FRC’s register, ICAEW will likely be sharing details about annual returns, inspection go to experiences from QAD, disciplinary findings, and any situations and restrictions imposed by ICAEW’s Audit Registration Committee. Equally, the FRC will likely be sharing info with ICAEW, together with, for instance, any situations it imposes or when a agency applies to come back off the FRC’s register.
Be ready Corporations that already audit a number of PIEs ought to already be properly on their option to getting registered underneath the transitional course of. “But when any companies assume they perform PIE audits and haven’t but spoken to the FRC, they need to contact the FRC group as quickly as doable,” says Elaine. Corporations with current or potential shoppers on the cusp of being a PIE, or who’re prone to fall underneath the expanded definition, want to remain alert to present and future regulatory adjustments, and issue these into their consumer improvement and wider enterprise plans.
