ICAS

Quicklinks

  1. About Us

    Find out about who we are and what we do here at ICAS.

  2. Find a CA

    Search our directory of individual CAs and Member organisations by name, location and professional criteria.

  3. CA Magazine

    View the latest issues of the dedicated magazine for ICAS Chartered Accountants.

  4. Contact Us

    Get in touch with ICAS by phone, email or post, with dedicated contacts for Members, Students and firms.

Login
  • Annual renewal
  • About us
  • Contact us
  • Find a CA
  1. About us
    1. Governance
    2. ICAS Strategy 2030
  2. Members
    1. Become a member
    2. Newly qualified
    3. Manage my membership
    4. Benefits of membership
    5. Career support
    6. Mentoring
    7. CA Wellbeing
    8. More for Members
    9. Area networks
    10. International communities
    11. Get involved
    12. Top Young CAs
    13. Career breaks
    14. ICAS podcast
    15. Newly admitted members 2022
    16. Newly admitted members 2023
  3. CA Students
    1. Student information
    2. Student resources
    3. Learning requirements
    4. Learning updates
    5. Learning blog
    6. Totum Pro | Student discount card
    7. CA Student wellbeing
  4. Become a CA
    1. How to become a CA
    2. Routes to becoming a CA
    3. CA Stories
    4. Find a training agreement
    5. Why become a CA
    6. Qualification information
    7. University exemptions
  5. Employers
    1. Become an Authorised Training Office
    2. Resources for Authorised Training Offices
    3. Professional entry
    4. Apprenticeships
    5. Learning redefined
  6. Find a CA
  7. ICAS events
    1. CA Summit
  8. CA magazine
  9. Insight
    1. Finance + Trust
    2. Technology
    3. Finance + EDI
    4. Finance + Mental Fitness
    5. Finance + Leadership
    6. Finance + Sustainability
  10. Professional resources
    1. Anti-money laundering
    2. Audit and assurance
    3. Brexit
    4. Business and governance
    5. Charities
    6. Coronavirus
    7. Corporate and financial reporting
    8. Cyber security
    9. Ethics
    10. Insolvency
    11. ICAS Research
    12. Pensions
    13. Practice
    14. Public sector
    15. Sustainability
    16. Tax
  11. CPD - professional development
    1. CPD - Everything you need to know
    2. CPD courses and qualifications
    3. CPD news and updates
    4. CPD support and advice
    5. Career support
  12. Regulation
    1. Complaints and sanctions
    2. Regulatory authorisations
    3. Guidance and help sheets
    4. Regulatory monitoring
  13. CA jobs
    1. CA jobs partner: Rutherford Cross
    2. Resources for your job search
    3. Advertise with CA jobs
    4. Hays | A Trusted ICAS CA Jobs Partner
    5. Azets | What's your ambition?
  14. Work at ICAS
    1. Business centres
    2. Meet our team
    3. Benefits
    4. Vacancies
    5. Imagine your career at ICAS
  15. Contact us
    1. Technical and regulation queries
    2. ICAS logo request

Study supports audit and supervision links

  • LinkedIn (opens new window)
  • Twitter (opens new window)
By ICAS

30 June 2015

Main points:

  • Study examines changes in relationship between auditors and supervisors in financial services.
  • Call for strengthening the quality of the auditor-supervisor dialogue.
  • Work published as PRA consults on auditor-supervisor engagement.

Research commissioned by ICAS supports re-establishing the links between supervisors of financial services firms and their auditors.

New ICAS research supports the strengthening of the relationship between auditors and supervisors of financial services firms.

The financial crisis brought to the fore public and governmental concerns over the audit, regulation and supervision of financial services. One of the major initiatives undertaken in the UK following the crisis was the re-establishment of the links between supervisors of financial services firms and their auditors.

This study, published by ICAS and undertaken by Professor Ian Dewing and Peter Russell from the Norwich Business School, University of East Anglia, investigates the changes to the relationship between auditors and supervisors since the financial crisis, the impact of the crisis on risk governance and the key accounting and auditing judgements of financial services firms.

The findings from the research are linked to current developments and proposals for change, both within the sector and more broadly within assurance.

This new independent report is particularly timely as it provides evidence for the Prudential Regulation Authority's (PRA's) consultation paper on the engagement between external auditors and supervisors.

Key findings

The study Audit, supervision and risk in financial services finds that:

There is widespread support for the reinvigoration of the relationship between auditors and supervisors, but there is recognition that this is an evolving process. Initiatives to enhance this dialogue would be welcomed.

Concerns were expressed about supervisors trying to impose their views on accounting and auditing judgements, this was seen as the responsibility of the firm and their auditors.

There has been a rapid growth in risk management in financial services firms, including the creation of risk committees and the changing nature of internal audit.

The demarcation of issues between the risk and audit committees was sometimes an issue for firms, but this was resolved by overlapping membership.

Whilst auditors have been criticised publicly for a lack of scepticism, this was not borne out by interviewees from either the audit or financial services firms.  There was recognition, however, that there was more need to document challenge.

Recommendations

The researchers make a number of recommendations, including:

Strengthening the quality of the auditor-supervisor dialogue. The PRA's proposal to require auditors of the largest banks and building societies to produce written reports to the PRA should be adopted.

Providing information to stakeholders about the auditor-supervisor dialogue. Auditors of financial services firms should include discussion of the dialogue in the new extended auditor's report.

Informing financial services firms, investors and wider stakeholder groups. A summary of the key topics discussed at high-level meetings between the PRA and audit firms should be published.

Enhancing the effectiveness of the internal auditor-supervisor dialogue. The Chartered Institute of Internal Auditors (CIIA), in conjunction with regulators, should establish a process for the independent monitoring of compliance with the CIIA's Code on internal audit in financial services.

Peter Russell said: "Prior to the financial crisis contact between auditors and supervisors had largely disappeared. We found that following the financial crisis the auditor-supervisor dialogue has been reinvigorated and transformed to the mutual benefit of auditors, supervisors and financial services firms."

Prof Dewing said: "In addition to improved external auditor-supervisor dialogue, we also found that growth of risk management and internal audit functions and separately established risk committees are making important contributions to strengthening the corporate governance of UK financial services firms."

Michelle Crickett, Director of Research at ICAS, said, "We are very pleased to publish this research focusing on audit, risk and supervision in the financial services sector.  The research covers a period of significant regulatory change in the sector and highlights the importance of a close auditor-supervisor relationship.

"ICAS welcomes the reinvigoration of this relationship and hopes that the research will be useful to the PRA in its deliberations on how to continue to enhance this vital contact."

Notes:

For more information contact Research@icas.com

About the research:

The research is based on a review of regulatory and other documentation and a series of interviews with audit partners and representatives of financial services firms.

About the authors: Ian Dewing is a Professor and Peter Russell is a Senior Lecturer in accounting at Norwich Business School, University of East Anglia.

2023-05-newbrand 2023-05-newbrand

Footer links

  • Contact us
  • Terms and conditions
  • Modern slavery statement
  • Privacy notice
  • CA magazine

Connect with ICAS

  • Facebook (opens new window) Facebook Icon
  • Twitter (opens new window) Twitter Icon
  • LinkedIn (opens new window) LinkedIn Icon
  • Instagram (opens new window) Instagram Icon

ICAS is a member of the following bodies

  • Consultative Committee of Accountancy Bodies (opens new window) Consultative Committee of Accountancy Bodies logo
  • Chartered Accountants Worldwide (opens new window) Chartered Accountants Worldwide logo
  • Global Accounting Alliance (opens new window) Global Accounting Alliance
  • International Federation of Accountants (opens new window) IFAC
  • Access Accountancy (opens new window) Access Acountancy

Charities

  • ICAS Foundation (opens new window) ICAS Foundation
  • SCABA (opens new window) scaba

Accreditations

  • ISO 9001 - RGB (opens new window)
© ICAS 2022

The mark and designation “CA” is a registered trade mark of The Institute of Chartered Accountants of Scotland (ICAS), and is available for use in the UK and EU only to members of ICAS. If you are not a member of ICAS, you should not use the “CA” mark and designation in the UK or EU in relation to accountancy, tax or insolvency services. The mark and designation “Chartered Accountant” is a registered trade mark of ICAS, the Institute of Chartered Accountants of England and Wales and Chartered Accountants Ireland. If you are not a member of one of these organisations, you should not use the “Chartered Accountant” mark and designation in the UK or EU in relation to these services. Further restrictions on the use of these marks also apply where you are a member.

Our cookie policy

ICAS.com uses cookies which are essential for our website to work. We would also like to use analytical cookies to help us improve our website and your user experience. Any data collected is anonymised. Please have a look at the further information in our cookie policy and confirm if you are happy for us to use analytical cookies: