Comments from ACCA to the Auditing Practices Board, 29 October 2010.
We are pleased to respond to the above Consultation Draft. The revision has been limited to conforming changes for the clarified auditing standards and, because there is no change to the process agreed between the UK auditing profession and the British Bankers Association (BBA) no other changes have been proposed.
Recent discussions involving auditors, banks, representatives of the accountancy bodies and the BBA have identified a need to address the following matters, which may in future affect the process for bank confirmations in the UK:
Whether or not in relation to changes in the process, we strongly suggest that the Practice Note (PN) should be revised so that it deals only with administrative matters relating to the specific UK circumstances.
Material that interprets the requirements and application material in ISA (UK and Ireland) 330The auditor’s responses to assessed risks and ISA (UK and Ireland) 505 External confirmations, should be removed. Such material is not considered necessary for the purposes of the International Standards on Auditing and we have no reason to believe that auditors in the UK are in need of extra interpretation in what is a relatively simple aspect of an audit.
To implement this, we consider that paragraphs 9 and 10 should be deleted. Indeed, the whole first section (paragraphs 1 to 10) could be deleted as it mainly comprises cross references. Any material of an introductory nature could simply be transferred to the Introduction (the nature of which we comment on further below).
The Auditing Practices Board has invited comments on, in particular, whether it is helpful to retain, in the Introduction, an explanation of the development of the current process for obtaining bank reports.
We note that PNs normally contain a Preface and an Introduction. While the content of these sections varies from one PN to another, it is generally the case that the Preface explains the purpose of the PN (its subject matter), the relationship of the document to ISAs (UK and Ireland) and what changes have taken place in the most recent revision. The introduction may begin by repeating the purpose of the PN before providing an overview of key aspects of the subject matter.
On the basis of consistency, there is a case for removing material dealing with changes made before 2010 from the Introduction and transferring material dealing with the current changes to the Preface. However, there is much useful material in the paragraphs dealing with those earlier changes and we suggest that a brief summary concentrating on the 2007 changes could be made to serve as the Introduction; as otherwise the PN commences abruptly with the section Planning: risk assessment and audit evidence.