Consultation on revised practice note for audit of UK housing associations

PN14 provides sector specific guidance on applying the FRC’s auditing standards to an audit of housing associations. PN14 was last revised in 2014 and since then there have been significant changes in the devolved regulatory regimes under which housing associations operate.

In addition, changes in the operating environment for housing associations means that new business risks have arisen and those identified in the previous revision of PN14, while mostly still relevant, have changed in their relative significance.

The FRC said these factors, along with a need to update material due to the issuing of revised ISAs (UK), and a need to ensure that FRC guidance remains current and fit for purpose, meant that revisions to PN14 were necessary.

The objectives in revising PN14, in addition to editorial and stylistic changes, were:

• Ensuring that the information provided in relation to the devolved regulatory regimes is current, achieved through direct linkage to the relevant regulator’s websites, better facilitating timely future updates.
• Ensuring that the business risks identified are current, reflective of the risks faced by housing associations and includes new risks that have arisen since the last revision to PN14 in 2014.
• Developing the sections on individuals ISAs (UK) to aid auditors in identifying and responding to business risks, highlighting additional areas where the nature of the housing association business model means more attention may be required by the auditor.
• Removing any general guidance which does not relate specifically to housing associations in order to improve the clarity and usability of PN14. This is an overall objective when revising the FRC’s practice notes and is not isolated to revisions of PN14.

The FRC is requesting comments on this consultation by 5pm on January 29. Comments are invited in writing on all aspects of the consultation, particularly in relation to questions 1-3.

Comments on the Consultation Paper should be sent to Jason Bradley, project director at the Financial Reporting Council E-mail: AAT@frc.org.uk.