The Auditing Practices Board (APB) has published Revised Ethical Standards for Auditors (ESs), which become effective for audits of financial statements for periods commencing on or after 6 April 2008.

There have however been no major changes to the standards and in particular, contrary to the expectations of some, the Provisions Available for Smaller Entities (ESPASE) will continue into the new regime.

Free download

The new standards can be downloaded, free of charge, from www.frc.org.uk/apb/publications/ethical.cfm. Make sure you scroll down the page to the revised standards, as the current versions are still available for download at the top of the webpage.

Further changes may be made to the ESs later this year, following further APB consultation over partner rotation periods on listed company audits.

Feedback from QAD visits

While few changes have been made to the existing ESs, it is understood that the QAD are carefully reviewing firms’ procedures for identifying threats to independence and planning appropriate safeguards. In particular, the QAD are finding that many firms are not properly identifying all additional services carried out for their audit clients (ES 5) and as such are not planning suitably robust safeguards.

There are also reported weaknesses in the communicating of independence threats and planned safeguards to those charged with governance. While this doesn’t strictly have to be a written communication, we would recommend firms include these details in the letter of comment each year.

SWATUK Compliance Visits

The above points are fairly consistent with the issues found on SWATUK reviews.

Compliance with the Ethical Standards is a serious issue that firms needs to address and a SWATUK Audit Compliance and Cold File Review visit can help with this. For more information or to arrange a review, call us on 0800 2800 433.

Sharon Cooke
April 2008