Audit and Assurance Council

What is the Audit and Assurance Council?

The Audit and Assurance Council (AAC) is a specialized advisory body created in 2012 to provide the Financial Reporting Council (FRC) with guidance on audit and assurance matters. This includes deliberating on the formulation and implementation of codes, standards, and regulations that govern audit practices in the United Kingdom. The AAC plays a key role in maintaining and improving the quality of audits, thereby enhancing the reliability of financial reporting.

Key Functions of the Audit and Assurance Council

1. Advisory Role: Unlike its predecessor, the Auditing Practices Board (APB), the Council’s role is purely advisory. It does not have direct regulatory responsibilities but influences the standards and practices followed by auditors through its recommendations to the FRC.
2. Standards and Codes: The Council contributes to the development of audit and assurance standards and codes, ensuring they remain relevant and robust.
3. Ethical Guidance: Offers guidance on ethical issues in auditing and assurance to ensure integrity and public confidence in the auditing process.

Composition of the Audit and Assurance Council

The Council comprises up to twelve members, a significant portion of whom must be from outside the audit profession to ensure independence and objectivity in its guidance. At least half of the members are non-practitioners, promoting a balanced perspective in its advisory role.

Examples of Audit and Assurance Council Activities

1. Revision of Audit Standards: The Council may advise on updating existing audit standards to reflect new regulations or emerging industry practices.
2. Ethical Guidelines: Providing recommendations on ethical challenges faced by auditors to the FRC.
3. Consultations: Engaging with stakeholders via consultations to gather insights and opinions on proposed changes in auditing standards or practices.

Frequently Asked Questions (FAQ)

Q: What is the primary role of the Audit and Assurance Council?

A: The primary role is to advise the Financial Reporting Council on audit and assurance matters, including the development of relevant codes and standards.

Q: How does the Audit and Assurance Council differ from the Auditing Practices Board?

A: The AAC has a more limited and advisory-focused role compared to the APB, which had direct regulatory responsibilities.

Q: Who are the members of the Audit and Assurance Council?

A: The Council comprises up to twelve members, with at least half being non-practitioners, ensuring a balanced view from both within and outside the audit profession.

Q: Does the Audit and Assurance Council draft new auditing standards?

A: While the Council advises on the creation and revision of standards, the drafting and adoption are overseen by the Financial Reporting Council.

Related Terms

1. Financial Reporting Council (FRC): The UK’s regulatory body responsible for overseeing financial reporting, accounting, and auditing standards.
2. Auditing Practices Board (APB): The predecessor to the AAC, which had broader regulatory powers in setting auditing practices standards.
3. Audit Quality: Refers to the degree to which an audit is performed following established criteria and standards, to ensure accuracy and reliability.
4. Assurance: A process that evaluates the accuracy and validity of financial records and statements, typically conducted by an auditor.
5. Ethics in Auditing: Guidelines and practices auditors must follow to maintain integrity, objectivity, and professional behavior.

Online Resources and References

• Financial Reporting Council (FRC): The official website of the Financial Reporting Council.
• Audit and Assurance Bulletin: Articles and updates on audit and assurance matters from the Institute of Chartered Accountants in England and Wales.

Suggested Books for Further Studies

1. “Principles of Auditing & Other Assurance Services” by O. Ray Whittington and Kurt Pany: This book provides comprehensive coverage of auditing practices and standards.
2. “Auditing and Assurance Services” by Alvin A. Arens, Randal J. Elder, and Mark S. Beasley: A textbook that offers an in-depth understanding of audit and assurance services, with real-world examples.

Audit and Assurance Council Fundamentals Quiz

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