FRC publishes “first of its kind” professional judgement guidance for auditors
The Financial Reporting Council (FRC) has today published comprehensive professional judgement guidance for auditors to improve how they exercise professional judgement.
Professional judgement is key to high quality audit, however the FRC regularly identifies poor professional judgement as one of the most significant issues affecting audit quality.
The new guidance includes a framework for making professional judgements and a series of illustrative examples. If applied widely, the guidance will improve audit quality by enhancing the consistency and quality of professional judgement exercised by auditors.
The guidance will be of particular use for auditors and central technical teams but will also have wider interest for those interested in audit quality, such as audit committee members and investors.
Mark Babington, the FRC’s executive director of regulatory standards, said: “Professional judgement is a fundamental requirement for high quality audit. Unfortunately the FRC’s supervision and enforcement work regularly finds professional judgement has not been exercised effectively and consistently, undermining audit quality and trust in audited accounts.
“The new guidance, which is the first of its kind by a regulator, sets out a clear framework for how auditors should exercise professional judgement to enhance audit quality.”
The full report is available here.