ACCA welcomes the opportunity to comment on the proposals issued by the FRC. We support the enhancement of the auditor requirements aimed at detecting and reporting material misstatements resulting from non-compliance with laws and regulations. Updating the standard in this way will undoubtedly enhance the quality of audit processes, offering users greater assurance that potential material misstatements have been thoroughly assessed and leading to increased stakeholder confidence in the quality of audits carried out. We also commend the transition to a risk-based approach, allowing auditors to focus on laws and regulations that are most likely to have a material impact on the financial statements.
It is noted that the FRC recognises the inherent limitation to the scope of auditor responsibilities, understanding that auditors cannot be expected to comprehensively identify and determine compliance with all laws, regulations, and ethical standards applicable to the entity. It is important, though, to recognise and consider two issues: firstly, that the primary responsibility for ensuring compliance with relevant laws and regulations rests with management supported by their finance teams, and, secondly, that the updated requirements are likely to escalate the workload for auditors. ACCA ask that the FRC carefully consider the risk that in practice the impact of the updated requirements could be to shift workload from management to the auditor. This would not be appropriate.