The Implications of New Accounting and Auditing Standards for the 'True and Fair View' and Auditors' Responsibilities
Comments from ACCA
November 2005
ACCA is please to respond to the invitation to comment on the above. We have provided comments separately on the exposure draft Accounting standard-setting in a changing environment: the role of the ASB and do not, therefore, repeat relevant comments within that document in this letter.
We concur with the FRC’s view that the true and fair view remains a cornerstone of financial reporting and auditing in the United Kingdom. We further support the FRC’s views in relation to the centrality of professional judgement to those activities and the continuity of the objectives and nature of responsibilities of auditors.
If we were to disagree with any aspect of the above paper it would be to regret that the FRC could not go further than suggesting that the new framework of accounting and auditing standards was at least as strong as that in place over the last twenty years. In our view, the new is considerably better than the old; whether one considers company law, financial reporting, auditing or professional ethics. In addition, the beneficial impact of independent regulation should not be underestimated.
Looking towards the future, in the case of auditing, we would expect the FRC and its relevant operating bodies to play a leading role in the development of International Standards on Auditing (ISA) and their adoption in the European Union. Concern has rightly been expressed that an unduly rules-based approach in ISA would threaten the quality of auditing by diminishing the importance of the auditor’s professional judgement. It is essential, therefore, that the FRC continues its support of the principles-based approach to auditing standards so that they remain fully appropriate for use in the United Kingdom.