In a bid to enhance the role of auditors in prudential regulation, the Financial Services Authority (FSA) and the Financial Reporting Council (FRC) published today a summary of feedback gathered from various accounting firms, financial institutions and other players.

Among the major considerations of the paper are: the need to promote better communication and exchange of information between auditors and supervisors; the exercise by auditors of critical thinking; disclosure of the nature of managerial judgment; the depth and breadth of the powers vested in the FSA and FRC; and the scope of auditor reporting.

The publication describes the major considerations and future actions to be taken by both the FSA and FRC. Among these future plans, the authorities plan to: prepare a draft FSA code of practice in cooperation with the Bank of England; increase communication between the FSA and auditors; promote a more pragmatic implementation of section 166 skilled person reporting;  and formalizing cooperative ventures between the FSA and the FRC Audit Inspection Unit.

Reference: http://www.fsa.gov.uk/pages/Library/Communication/PR/2011/028.shtml