FRC to review standard of bank audits
The FRC is going to be analysing the audits of banks and building societies over this year. Attempts have been made to improve the quality of auditing of banks and building societies since the start of the financial crisis but these have been insufficient. As a result the FRC is planning to conduct a formal review of banks and building societies audits.
Within the FRCs draft plan & budget for 2014/25 they plan on conducting a formal review of bank audits in the second quarter of this year as soon as this year’s annual reports have been completed. This is in order to find out why progress in improving their quality has been so slow.
Concerns about the quality of auditing of banks and building societies remains and the issues and concerns that have been raised mean that a specific review of audit in this sector is warranted
Auditors have been heavily criticised for failing to spot the bad practices that contributed to the onset of the financial crisis in 2008, while the FRC’s on-going audit inspections have already identified various failings in how financial institutions are audited.
The FRC’s review will focus on the testing of loan loss provisions and general IT controls and look carefully at issues including the specific actions taken by the major firms to address issues previously identified and whether they have been effective.
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