UK: Audit reforms on hold during crisis
An overhaul of how the accounting industry is regulated is set to be delayed by the government because of the chaos facing financial markets due to the coronavirus outbreak.
The deadline for the call for evidence for the latest inquiry Delivering Audit Reform launched by the Business, Energy and Industrial Strategy (BEIS) Committee has been extended from 4 May to 31 July 2020.
UK: FRC Transformation Programme towards becoming ARGA
The Financial Reporting Council (FRC) continues to make progress towards becoming the Audit Reporting and Governance Authority (ARGA). It takes forward work on the recommendations of Sir Kingman’s Review of the FRC, the Competition and Markets Authority (CMA) Review and Sir Donald Brydon’s Review into the Quality and Effectiveness of Audit.
The FRC’s Transformation Programme comprises of the following six workstreams:
- Setting up the new regulator
- Audit scope & regulation
- Corporate regulation
- Corporate reporting
- Corporate governance
- Market reform
Netherlands: Quartermasters appointed to ensure audit reform implementation
Finance Minister Hoekstra has appointed two quartermasters to ensure implementation of the recommendations of the Committee on the Future of the Accountancy Sector (CTA). The appointment of Marlies de Vries, an assistant professor and former CTA member, and Chris Fonteijn, a former chairman of the Authority for Consumers & Markets (ACM), is effective as from 1 May 2020 for a period of three and a half years.
Progress on the audit reform delivery, however, is being slowed down due to the corona crisis also in the Netherlands. The parliamentary debate initially scheduled for 22 April has been postponed.
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Netherlands: Accountants fear claims because of fraud-prone labour costs subsidies
In the Netherlands, in the context of the corona crisis, all companies that have received subsidies from the government related to labour costs will need an accountant’s / auditor’s report and opinion to be able to file their 2020 financial statements. This is called a NOW accountant’s/auditor’s report. However, it is unclear for the moment what should be included in such report, which standards need to be used, etc. The Dutch accountancy profession is therefore in discussions with the government trying to find a way how to tackle the lack of standards and the risk of the measure being susceptible to fraud.
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Portugal: Audit oversight authority issues English translation of the new guidelines on audit quality indicators
The Audit Policy Update from January 2020 informed about the new guidelines on audit quality indicators (AQIs) in Portugal. These guidelines became applicable already for audits related to financial year 2019. They set the following 8 AQIs:
- AUDIT HOURS – proper involvement of employees with more experience
- PARTNER WORKLOAD – availability (hours) of the partner who is in charge of the audit
- EXPERIENCE – years of experience of auditors and staff
- TRAINING – number of hours of training of auditors and staff
- TURNOVER RATE – percentage of employee departure
- HOURS PER AUDIT PHASE – hours spent on each audit by phase (planning, execution and reporting) and indication of completion dates
- RESULTS OF INTERNAL AND EXTERNAL QUALITY CONTROLS – results of monitoring processes (internal and external)
- QUALITY CONTROL FUNCTIONS – hours of employees assigned to the areas of quality control
The Portuguese Securities Market Commission (CMVM), the audit oversight authority, has now issued an English translation of the guidelines