The FSA is heavily reliant on the quality of financial reporting both in the UK and globally. This is because as regulator of the UK financial services sector we have an interest in the accounting profession, the auditing and accounting standard setters and the work of the related enforcement agencies and the effect they can have on our statutory objectives.

We are also a prudential regulator in which capacity we rely on high quality financial information that has been independently audited as a basis for the prudential assessment of the firms we regulate, and for verification of certain key aspects of our prudential rules.

We are also a market regulator and, as such, we need to be confident that financial information made available to market participants is high quality, transparent and reliable.

Finally we are a leading global regulator of the world's largest host market, therefore we have an interest in global accounting and auditing standards that are consistently applied interpreted and effectively enforced.

Objectives of the Accounting & Audit Sector and Policy Team

  • Source of expertise
  • Risk Identification and Mitigation
  • FSA Communication
  • Ensuring Colleagues have the correct Skills and Experience
  • Keeping an overview of Coherency of Approach

Source of expertise

The team is the FSA's source of expertise on accounting and auditing and provides technical support and advice to internal and external stakeholders on financial reporting standards as well as other technical issues.

The team participates in the international regulatory bodies that develop comment letters and other views on emerging standards. It also ensures that the relevant amendments to the accounting framework are appropriately applied to the FSA Handbook.

Accounting and Auditing examples of work

Subject experts:

  • Auditing queries – Patricia Sucher / Ian Hersey
  • Bank, building society, investment firms and intermediary accounting issues – Ian Michael
  • Insurance and Reinsurance accounting issues – Shiva Iyer
  • Fair value accounting – Ian Michael / Patricia Sucher
  • Disclosure (Pillar 3) – Shiva Iyer / Ian Hersey

FSA Handbook Chapters:

Risk Identification and Mitigation

The identification of risks to the FSA's objectives and the means to mitigate these risks is a key role for the team. Links have been established with the major stakeholders in the accounting profession, ranging from Finance Directors of FTSE 100 companies and the Big Four audit firms, to the accounting oversight bodies, to hear their concerns and to discuss risks and their mitigation.

Within the FSA, a group has been set up which meets regularly, and is represented across divisions, to raise and discuss the risks posed by accounting and auditing in the various areas of expertise.

The sector is increasingly involved in dialogue with and research commissioned by the DBERR, ICAEW, FRC and Treasury looking at risks posed by accounting and audit issues.

FSA Communication

The sector holds regular meetings across the profession with the major accounting / audit firms, the accounting institutes, professional oversight bodies and international bodies.

The sector leader gives speeches on the FSA's views on accounting and auditing issues, for example on topics such as IFRS and the regulators view of internal audit.

Ensuring Colleagues have the Correct Skills and Experience

The sector team is looking at the provision of accountancy training across the FSA to ensure that a comprehensive training resource is available and that there is an effective knowledge resource in each relevant Division.

We have invited speakers from the profession to address the FSA on relevant topics, for example, Douglas Flint's talk on his review of the Turnbull guidance on internal control. We have also organised presentations on Section 166 Return Assurance Reports, as well as on Disclosures made by banks in their year end annual reports.

Keeping an Overview of Coherency of Approach

The sector contributes to both the IRO and FRO as well as ensuring that the Dashboard reflects the risks arising from accounting and auditing issues. We also contribute towards the FSA's annual report.

Please contact us if you have an issue which you think we should be aware of or if you think we might be able to help you. Our resources are small so what we can take on is limited but we will try to be helpful.

Key Initiatives

2007

CP07/15: External Assurance on Regulatory Returns

2006

Proposed extension of Audit exemption in the Companies Act 1985

Chapter 4 of CP 06/6