Our roundup of regulatory news.
A new approach to risk assessment
Alex Russell, Technical Manager, Audit Practice & Regulation at the Audit & Assurance Faculty explains why auditors will need to start thinking about risk differently.
Audit and Assurance Board
The Audit and Assurance Faculty Board oversees the work of the faculty and its various technical committees. Comprising representatives from across the audit profession, each faculty board member brings with them a wealth of knowledge and understanding of the current and future issues affecting the audit profession.
How to report on irregularities, including fraud, in the auditor’s report – a guide for auditors
This Know-How guide from ICAEW’s Audit and Assurance Faculty covers what irregularities are, how the requirements have changed in ISA (UK) 700 (Revised January 2020), what should be reported on in the auditor’s report, and how COVID-19 may impact what is reported.
Brexit-related risk
The effect of Brexit and COVID-19 on imports and exports, the location of staff, increased risks around fraud and estimate and forecast accuracy all affect auditing. Faculty resources are a valuable asset in understanding the problems.
Improving audit and assurance
Sir Donald Brydon has reviewed the quality and effectiveness of audit, recommending a three-year rolling audit and assurance policy, and ICAEW is examining how to implement his ideas. Carolyn Clarke reports on the plans.
John Selwoods question corner
John tackles questions from auditors as they adjust to recent and proposed changes relating to sample sizes, inherent risk, OEPIs and quality management.
The importance of detecting fraud
As standard-setters move forward with initiatives around fraud and going concern, Katharine Bagshaw looks into the concerns and proposed reforms – and shares some ICAEW perspectives on progress.
Mortgage payment holiday set to be extended until October 2020
Homeowners who are struggling to pay their mortgage due to COVID-19 are set to be given a further three-month extension on their mortgage payments.
For those homeowners who have paused their mortgage but now wish to resume payments, they will be given various options to help make these more manageable. One of the proposed options will be to extend the mortgage term so their monthly repayments remain at about the same level as they were prior to their mortgage holiday.
As well as extending the mortgage payment holiday, the application deadline for a mortgage holiday will also be extended until 31st October. This means that eligible homeowners that have not yet had a payment holiday, will be able to request one.
These proposals are included in new draft guidance from the Financial Conduct Authority (FCA), which sets out the expectations for mortgage companies and the options available to homeowners.
The move comes after more than 1.8 million mortgage payment holidays were taken up when the support measure was announced in March and would be coming to an end in June. The draft guidance obliges the lender to contact the homeowner to discuss their options.
John Glen, Economic Secretary to the Treasury said: “We’re doing everything we can to help people with their finances at this difficult time, and that includes making sure people get the support they need with their mortgages. That’s why we’re working with the banks and lenders to extend payment holidays if people need them… Everyone’s circumstances will be different, so when homeowners can pay some or all of their mortgage, they should work with their lender on a plan; but if they are still struggling, I want them to know that help is there.”
UK SMEs face complicated recovery
Research for Accountancy Age highlights disparity between SMEs across the UK as they begin to emerge from lockdown.
Over one-third of small-to-medium sized businesses (SMEs) have been “completely disrupted” by the pandemic, according to new research by FreeAgent.
Overall, 87 percent of surveyed SMEs said their business had suffered due to coronavirus, with further research suggesting that SMEs are all at different stages of recovery as the UK begins to emerge from lockdown.
68 percent of SMEs are deferring their tax payments, although the majority do expect to pay these tax liabilities back within six months.
YouGov research also found that nearly one-fourth of small businesses haven’t seen a change in their expenses, and the majority (57 percent) have seen the number of expenses submitted decrease. However, the cost of office equipment, software and household costs have all risen during lockdown.
The overall change in working practices was ‘easy’ for 68 percent of YouGov-surveyed companies, although small businesses did lag behind the enterprise market ‘substantially.’