Compliance Responses and Action Plans

  • Compliance Responses and Action Plans

    IFAC members and associates have provided self-assessment information about the regulatory and standard-setting framework in their countries (Part 1) and their organizations' activities in addressing IFAC's membership requirements (Part 2) as described in the Statements of Membership Obligations. Based on an analysis of this information, they are developing SMO Action Plans for continuous development and improvement.

    Some organizations have qualified to submit SMO Action Plans on a biennial basis by meeting eligibility criteria. These organizations are indicated with an asterisk (*).

    In the interest of transparency and providing information to the profession, regulators, and other stakeholders, all responses and SMO Action Plans are accessible below.

    The Institute of Chartered Accountants in England & Wales

     

    Introduction

    The information below has been submitted as part of the IFAC Member Body Compliance program. The Program has two components:

    Part 1: Assessment of the Regulatory and Standard-Setting Framework (provides information about regulatory requirements and standard-setting processes in member body countries); and
    Part 2: Assessment of Compliance (provides information on compliance by member bodies with the Statements of Membership Obligations). Part 2 of the Compliance Program will begin later this year, and the results will also be posted to the website.

    The responses to Part 1 are provided below. IFAC staff has reviewed the responses and, where necessary, validated them with external knowledgeable parties. A list of key terms is available to assist readers in understanding the responses.

    The purpose of this Part 1 Assessment is to collect information on the roles of IFAC member bodies and other organizations (including government, regulatory or other appointed authorities) with respect to:

    1. Setting auditing, accounting, ethics, public sector and education standards; and
    2. Regulating the accountancy profession.

    Sections 1 and 2 of Part 1 contain an introduction and instructions for member body respondents. For this reason, they are not included here, and the responses begin with Section 3.

    Questions or comments may be sent to complianceassessment@ifac.org.


    Section 3 -- Member Body General Information

    1. Country:

      United Kingdom


    2. Name of member body:
      The Institute of Chartered Accountants in England & Wales

      Or please specify name:



    3. Individual responsible for preparation:
      Jean Ettridge


    4. Date member body became a member of IFAC:
      Note: Please enter a numeric date (e.g., 12/2001, Month/Year)

      10 / 1977



    Questions 5 - 22 are for internal use only


    Section 3G -- Affiliations


    23. Please list those regional organizations to which your organization belongs (e.g., FEE, CAPA, ECSAFA, IAA, etc.):
      FEE (full member)

      ECSAFA (affiliate member)

      ICAC (affiliate member)



    Section 4 -- Statutory Framework


    Responses to this section will provide a description of the legal framework governing the commercial aspects of auditing and financial reporting in your country.

    Section 4A -- The Companies Act or Commercial Code


    The following questions concern the Companies Act (the Act) or Commercial Code (the Code) or similar Legal authority in your country. If no Legal authority exists, or the Legal authority does not address particular questions, please indicate "N/A" for Not Applicable.

    24. What is the full name of:
      a). the Act or the Code: Companies Act 1985, as subsequently amended (and which restated all previous equivalent legislation including the Companies Act 1981, which implemented the 4th Directive and came into force in 1982)
      b). the Enacting body: Government, Department of Trade and Industry
      c). date the Act or Code came into force: 07 / 1985


    25. How can IFAC obtain a copy of the Act or Code?
      It is published in Butterworths' Company Law Handbook (currently in its 17th Edition), which can be obtained by contacting +44 208 662 2000, and is available online at www.lexisnexis.co.uk by subscribing to LexisNexis Online Services (tel: +44 1483 257726).


    26. Is the Act or Code available in English?
      Yes   No


    27. What are the types of entities covered by the Act or the Code?
      Please check all that apply.
      Listed entities   Other (please specify): Limited Liability Partnerships
      Private companies   Other (please specify): Not for profit (only to the extent they fall into another category e.g., they are companies
      Governmental   Other (please specify):
      Not-for-profit   Other (please specify):


    28. Is there a requirement for the following entities to prepare annual statutory financial statements? If YES, please describe the financial reporting requirements including the accounting standards to be followed.
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities Accounts to consist of Profit and Loss Account and Balance Sheet, giving a true and fair view. UK accounting standards (issued by the Accounting Standards Board ("ASB") also to be followed, which require a cash flow statement and a statement of total recognised gains and losses (listed entities will not be subject to UK accounting standards as from 1 January 2005). Copies of UK accounting standards can be obtained from the ASB at the following link: www.asb.org.uk/asb/publications.
      Private companies As above
      Governmental
      Not-for-profit As above
      Other (please describe) Limited Liability Partnerships As above
      Other (please describe)


    29. Is there a statutory requirement for the following entities to be audited? If YES, describe the requirement including the auditing standards to be followed:
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities Auditor to state whether the accounts give a true and fair view and are properly prepared in accordance with the requirements of the Act. The standards to be followed are the UK AuditingStandards issued by the Auditing Practices Board. As from 1 January 2005, International Auditing Standards will apply to all UK companies (subject to an exception for companies that have both a turnover of not more than £5.6 million and gross assets of not more than £2.8 million)
      Private companies as above
      Governmental
      Not-for-profit as above
      Other (please describe) Limited Liability Partnerships as above
      Other (please describe) Limited Liability Partnerships


    30. Are the auditors ("statutory auditors") that are appointed for audits required by the Act or Code ("statutory audits") appointed for a specific period?
      Yes   No
      If YES, please indicate the term of appointment: 1 Year(s)


    31. Who appoints the statutory auditors?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify): Board of directors applies in the event of a vacancy, for example, if the auditor resigns during an accounting period.)
      Audit committee   Other (please specify):
      Government agency   Other (please specify): Note re Q30: Term of appointment is 1 year, but auditor can be reappointed at the Annual General Meeting


    32. Does the Act or Code require joint auditors for the statutory audit?
      Yes   No
      If yes, please describe the requirement:


    33. Does the Act or Code require the rotation of the auditors or audit firms performing statutory audits?
      Yes   No
      If yes, please describe the requirement:



    Section 4B -- Securities Market Regulations


    Responses to this section will provide a description of the financial reporting and auditing requirements for listed entities in your country.

    34. What are (a) the major items of Legal authority for such requirements, (b) the Enacting body(ies) and (c) the latest amendment date? Please identify the specific articles or sections that pertain to auditing and financial reporting:
    1. the major items of Legal authority for such requirements

      The Listing Rules.

    2. the Enacting body(ies)

      The UK Listing Authority (UKLA), part of the Financial Services Authority (FSA).

    3. the latest amendment date?

      05/2004


    35. How can IFAC obtain a copy of the Legal authority?
      The Listing Rules are available at http://www.fsa.gov.uk/ukla/1_listinginfo4.html


    36. Is the Legal authority available in English?
      Yes   No


    37. Are there any additional or alternative financial statement reporting requirements for listed entities that are not described in your answer to Question 28?
      Yes   No
      If YES, please describe the requirement:
      Half-yearly interim reporting.


    38. Are there any additional auditing requirements that apply to listed entities other than those described in your answer to Question 29 (e.g., additional GAAS requirements, additional independence requirements, requirements to report to those charged with governance, etc.)?
      Yes   No
      If YES, please describe the requirement:
      Reporting on corporate governance disclosures.


    39. Who appoints the statutory auditors of listed entities?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify): See also Question 31
      Audit committee   Other (please specify):
      Government agency   Other (please specify): Note re Q40: Term of appointment is 1 year, but auditor can be reappointed at the Annual General Meeting


    40. Are auditors who perform audits of listed entities appointed for a specified period?
      Yes   No
      If YES, please indicate the term of appointment: 1 Year(s)


    41. Are joint auditors required for audits of listed entities?
      Yes   No
      If YES, please describe the requirement:


    42. Is rotation of the auditor or audit firm for audits of listed entities required?
      Yes   No
      If YES, please describe the requirement:
      UK (ICAEW, ACCA, ICAS and ICAI) recommended practice is that individual audit engagement partners of listed company audit clients are rotated at least every 5 years. Other key audit parties at group level on listed entities should rotate at least every 7 years. (ACCA's Code of Ethics recognises that rotation may not be possible in all circumstances, due to the size of the firm or the nature of the engagement. In such cases, it requires suitable alternative safeguards (e.g. external consultation) to be applied to reduce risks to an acceptable level).



    Section 5 -- Auditing Standards


    Responses to this section will provide a description of the legal and professional framework governing audit and other assurance standards in your country. The section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 5A -- Statutory Framework


    43. Please provide the name of the Legal authority and/or self-regulatory rules that establish audit and other assurance standards in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting audit and other assurance standards. If the standards are different for different entities (e.g., listed entities, private companies, governmental bodies, not-for-profit organizations, etc.), please specify the details that apply to each:
      Type of entity Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting audit and
      other assurance standards
      Listed entity Companies Act 1985 (Private and public companies, including listed entities) Note 1 Auditing Practices Board (APB)
      Other (please describe) LLPs Limited Liability Partnerships Act 2000 Note 1
      Other (please describe) Entities established under legislation See Note 2
      Other (please describe) Public sector and other audits See Note 3 and Note 4

      a. How can IFAC obtain copies of these documents?



      b. Are the documents available in English?
      Yes   No


    Section 5B -- Standard-Setting (Auditing Practices Board (APB))


    44. For Auditing Practices Board (APB), please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body



      b. Name of standards

      Statements of Auditing Standards (SASs).

      The Auditing Practices Board also issues Practice Notes, Bulletins and Statements of Investment Reporting Circular Standards.


    45. How many voting members does the standard-setting body have?
      15


    46. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: All members of the Auditing Practices Board are involved on a voluntary basis except for the Executive Director who is an employee.


    47. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      40% of Auditing Practices Board members are required to be Responsible Individuals, i.e. eligible for appointment as company auditors under companies legislation. Any of the balance of 60% who are accountants may not be office holders of any accountancy body, nor involved in the governance of any accountancy body, nor partners in firms authorised to conduct audits. Representatives of the Accountancy Foundation, the Department of Trade and Industry, the Department of Trade and Enterprise in the Republic of Ireland, and the Financial Services Authority are entitled to attend and speak at meetings but not to vote.


    48. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      The Nomination Committee of the Financial Reporting Council leads the appointment of members of the Auditing Practices Board following best practice.


    49. What is the term of appointment for members?
      3 Year(s)


    50. For how many years has the standard-setting body been in existence?
      13 Year(s)


    51. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      $1,788,034

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      0.559273



    52. To what entity is the standard-setting body accountable?
      The Financial Reporting Council


    53. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Before publishing or amending a SAS or any other standard, the Auditing Practices Board publishes an exposure draft on its web-site, ensures that a hard copy of the document is circulated to the accountancy bodies and to other interested parties and allows at least three months, unless circumstances require a shorter period, for representations to be made on it. Where publications cause changes to be made to other previously issued publications, any such consequential changes are exposed for comments.

    2. accessibility of meetings (i.e., public or private)

      Private

    3. approval process for final standards (i.e., majority required to approve final standards)

      Decisions to establish, publish, amend or withdraw a SAS or an exposure draft thereof requires a majority of the votes of all the members of the Auditing Practices Board (whether present at a meeting or not).

      Decisions to establish, publish, amend or withdraw non-mandatory notes, guidance and other material relevant to auditing requires a simple majority of the votes of the members of the Auditing Practices Board who are at a meeting where a quorum is present and at which the matter is decided upon.

      Any other questions are decided by a majority of votes actually cast at a meeting. In case of an equality of votes, the chairman of the meeting has a second or casting vote.


    4. other relevant due process activities

      The Auditing Practices Board has established a Technical Advisory Group and publishes a review of its activities annually. For further details please see www.frc.org.uk/documents/pdf/apbstandingordersextractsforwebsite.pdf.


    54. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      10 Day(s)



    Section 6 -- Ethics


    Responses to questions in this section will provide a description of the legal and professional framework governing ethics standards for accountants in your country. This section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 6A -- Statutory Framework


    55. For each of the following types of professionals, please indicate the name of the Legal authority and/or self-regulatory rules establishing ethics standards for accountants and auditors in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting the ethics standards.
      Type of professional covered Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting ethics standards
      Professional Accountants in Public Practice See ICAEW attachment
      Professional Accountants in Business
      Professional Accountants in the Public Sector
      Other (please describe)

      a. How can IFAC obtain copies of these documents?



      b. Are the documents available in English?
      Yes   No


    Section 6B -- Standard-Setting (See ICAEW attachment)


    56. For See ICAEW attachment, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      See ICAEW Attachment for all information for this section.

      b. Name of standards



    57. How many voting members does the standard-setting body have?


    58. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    59. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?


    60. Who appoints these members (e.g., member body, government, user, regulator, etc.)?


    61. What is the term of appointment for members?
      Year(s)


    62. For how many years has the standard-setting body been in existence?
      Year(s)


    63. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)



    64. To what entity is the standard-setting body accountable?


    65. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards



    2. accessibility of meetings (i.e., public or private)



    3. approval process for final standards (i.e., majority required to approve final standards)



    4. other relevant due process activities



    66. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      Day(s)



    Section 7 -- Education


    Responses to questions in this section will provide a description of how education requirements for the profession are established. Please indicate the role your organization plays within this process.

    Section 7A -- Education Requirements


    67. Please describe in general terms the education system in your country including the different stages of education from early childhood education through to tertiary level study. Please indicate which aspects / levels are compulsory as part of the national education system:
      Schooling is compulsory from ages 5 to 16 through stages seen as infant/first, primary/middle and secondary. Education after 16 is voluntary. Higher Education (i.e. the university sector) commences at 18.


    68. Is there a legal authority or regulation that specifies the requirements for an individual to operate as an accountant or auditor in your country?
      Yes   No

      If YES, please provide the name and describe the requirements, including any relating to education, experience or qualifications.

      Accountancy per se is not legally restricted but company auditing is, as are insolvency and financial services. Company auditors must be registered auditors and in order to become a registered auditor an individual must hold a recognized qualification for audit under the Companies Act, 1989.


    69. Please select from below all the relevant key levels of requirements to obtain certification from your member body (i.e. to qualify as a certified or chartered accountant) and provide a general description of the requirement.
      Academic requirements
      In order to train for the ICAEW qualification, an individual must satisfy minimum entry standards. For example, a university degree from a recognized university, whilst not compulsory, would be sufficient. It should also be noted that an individual has to gain a training place with a firm and in order to do this they effectively have to compete with others who also want that place, thereby raising the entry qualification threshold.
      Professional examinations
      Practical experience
      Final qualifying examination
      See above.
      Other (please describe)


    70. Which of the following arrangements best describes who establishes the education requirements for the accounting profession in your country? Please select one option.
      A government ministry, department or agency establishes education requirements for the accounting profession with no additional requirements set by the member body(ies).
      A government ministry, department or agency establishes minimum education requirements for the accounting profession, and member body(ies) supplement these requirements.
      Member body(ies) establishes the education requirements for the accounting profession.
      Other (please describe) See Q71 for explanation.


    71. Please provide the name(s) of the relevant body in the government ministry, department, agency and / or member body who establishes the education requirements.
      For auditing and insolvency, the Department of Trade and Industry.

      For financial services, the Financial Services Authority.

      Additional info re Q70: Accountancy per se is not legally restricted in the UK. Therefore, professional bodies, such as ICAEW, decide who can be their members and members of the public are free to practise as accountants without necessarily joining a professional body. However, auditing (for instance) is legally restricted and the requirements are set by parliament/government.

    1. A general description of the role of the relevant body(ies) including how it operates and its due process in establishing the education requirements.

    2. How many voting members does the relevant body(ies) have

      N/A

    3. Are the members of the relevant body(ies) involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: Re Question71d - DTI established in 1970. FSA established in 1997.

    4. For how many years has the body been in existence?

      Year(s)


    72. How would you describe the authority that the education requirements have?
      Requirements are legally-based
      Requirements are set in the constitution, by-laws or other rules of the relevant body(ies).
      Requirements are set in member body(ies) policy document(s).
      Other (please describe)

    72 a. How can IFAC obtain copies of these documents?
      See the websites given above and also http://www.hmso.gov.uk

    72 b. Are these documents available in English?
      Yes   No


    73. Are the education requirements for accountants and auditors the same throughout your country, or do they differ among regions, provinces or states?
      Same   Different
      If different, please briefly describe the main differences:
      As explained, accountants and auditors face different practising requirements from each other. However, those individual requirements are consistent throughout the United Kingdom. Please note: there are no legal requirements to practise as an accountant in the UK.


    74. Please indicate the scenario that best describes who delivers the education and examination process for members of the profession. Please only select one option.
      The education program and final examination are delivered by the member body.
      The education program and final examination are delivered by the member body and other education institutions (e.g., universities, colleges, and others).
      The education program and final examination are delivered by education institutions (e.g., universities, colleges, and others).
      Other (please explain)


    75. Once qualified as a member of your professional body, can members offer their services directly to the public?
      Yes   No



    Section 7B -- Licensing


    76. Are there licensing requirements for auditors in your country?
      Yes (continue with Question 77)   No (proceed to Section 8)


    77. Who sets the requirements to obtain a license?
      Requirements come from the European Union (8th Company Law Directive), UK legislation (Companies Act, 1989) and the regulations of recognized qualifying and supervisory bodies (such as ICAEW).


    78. What are the requirements to obtain a license (please select all relevant requirements.)?
      Academic study specific for obtaining a license
      Practical experience
      Licensing examination
      Final qualifying examination
      Other (please describe)


    79. Are there ongoing requirements to retain a license?
      Yes   No

      If YES, please select all relevant requirements.
      Continuing professional development
      Re-examination
      Other (please specify): Professional Indemnity Insurance (PII) and continued compliance with the eligibility requirements of the audit regulations.


    80. What entity grants the license?
      The recognized qualifying/supervisory body (e.g. the ICAEW).


    81. Describe any additional licensing requirements for auditors of listed entities (e.g., additional education requirements, registration, etc.).
      N/A



    Section 8 -- Public Sector Accounting Standards


    Responses to this section will provide a description of the legal and professional framework governing public sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate, where appropriate, the role of your organization within this framework.

    Section 8A -- Statutory Framework


    82. Please provide the name of the Legal authority and/or self-regulatory rules establishing public sector accounting standards in your country, the date of last amendment and the name of the body responsible for setting public sector accounting standards. If the standards are different for different entities (e.g., whole of government, ministry/department, statutory authority/agency, profit entity owned by government, state governments, local governments, other [please specify]), please specify the details that apply to each.
      Type of entity Name of
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting public sector
      accounting standards
      Whole of government See ICAEW Attachment for further details. There are two bodies responsible for standard setting in this area as indicated at right. UK Treasury (overseen by Financial Reporting Advisory Board (FRAB))
      Ministry/department UK Accounting Standards Board/PSNC (Public Sector and Not-for-Profit Committee)
      Statutory authority/agency
      Profit entity owned by government
      State governments
      Local governments
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?



      b. Are the documents available in English?
      Yes   No


    Section 8B -- Standard-Setting (UK Treasury (overseen by Financial Reporting Advisory Board (FRAB)))


    83. For UK Treasury (overseen by Financial Reporting Advisory Board (FRAB)), please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Government department with statutorily recognized advisory board

      b. Name of standards

      Resource Accounting Manual and other non-departmental public body, trading fund and public corporation requirements.


    84. How many voting members does the standard-setting body have?
      14


    85. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    86. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      The Terms of Reference for the Financial Reporting Advisory Board give powers of nomination to a variety of bodies. These include the UK Accounting Standards Board, the UK audit bodies, departmental bodies, Office of National Statistics and an independent economist


    87. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      See above Question 86. Independent economist is nominated by the Head of Government Economic Service.

      Re: Question 88: Appointments are determined on an individual basis.


    88. What is the term of appointment for members?
      Year(s)


    89. For how many years has the standard-setting body been in existence?
      8 Year(s)


    90. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      N/A

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      N/A



    91. To what entity is the standard-setting body accountable?


    92. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      There is no public exposure of standards. There is internal consultation within Government and affected entities on changes to the Resource Accounting Manual /NHS Manual of Accounts and other accounting requirements for Non Departmental Public Bodies, Trading Funds & Public Corporations

    2. accessibility of meetings (i.e., public or private)

      Private

    3. approval process for final standards (i.e., majority required to approve final standards)



    4. other relevant due process activities

      None.


    93. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      6 Day(s)


    Section 8B -- Standard-Setting (UK Accounting Standards Board/PSNC (Public Sector and Not-for-Profit Committee))


    83. For UK Accounting Standards Board/PSNC (Public Sector and Not-for-Profit Committee), please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      National Standards Setter

      b. Name of standards

      SORPs for local government, further and higher education, social housing, and charities components of public benefit sector


    84. How many voting members does the standard-setting body have?
      13


    85. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: See also Section 9 for detail on ASB. The members of its Public Sector and Not-for-profit Committee are involved on a voluntary basis.


    86. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Best person for job allied with need to ensure adequate representation from different components of public benefit sector.


    87. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Members are appointed by the ASB.


    88. What is the term of appointment for members?
      2 Year(s)


    89. For how many years has the standard-setting body been in existence?
      14 Year(s)


    90. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      see section 9

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      see section 9



    91. To what entity is the standard-setting body accountable?
      The PSNC reports to the full Board (ASB), which is one of the operational bodies of the UK Financial Reporting Council


    92. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      For Accounting Standards Board SORPS are required to be exposed for a 3-month period.

    2. accessibility of meetings (i.e., public or private)

      Private

    3. approval process for final standards (i.e., majority required to approve final standards)



    4. other relevant due process activities

      ASB PSNC has produced a Discussion Paper on the Application of the UK Statement of Principles to the Public Benefit Sector, which it subjected to an exposure period of three months in 2003. It will follow this up with a further exposure draft in 2004 of proposals for a full interpretation.


    93. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      5 Day(s)



    Section 9 -- Private Sector Accounting Standards


    Responses to the questions in this section will provide a description of the legal, statutory and professional framework governing private-sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate what role your organization plays within this framework.

    Section 9A -- Statutory Framework


    94. Please provide the name of the Legal authority and/or self-regulatory rules that establish private-sector accounting standards in your country, the date of last amendment, and the name of the body responsible for setting private sector accounting standards. If the standards are different for different entities (for example, listed entities, private companies, governmental organization, not for profit organizations, etc.), please specify the requirements that apply to each.
      Type of entity Name of legal
      authority or
      applicable
      rules
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting private sector
      accounting standards
      Listed entity See 94a for further detail 8/1990 UK Accounting Standards Board
      Other (please describe)
      Other (please describe)
      Other (please describe)
      Other (please describe)

      a. How can IFAC obtain copies of these documents?

      www.asb.publications.com

      Re Q94: There is no legal authority in the UK that requires compliance with accounting standards. However, with effect from August 1990 UK companies, other than small and medium sized companies, have been required by the Companies Act 1985 to state whether their accounts have been prepared in accordance with applicable accounting standards and to give particulars of any material departure from those standards and the reasons for it.

      With effect from January 2005, group accounts for UK listed companies will be required to comply with standards prepared by the International Accounting Standards Board, when they have been approved by the European Commission. The UK Government currently intends that individual companies, and other groups, will be able to choose to comply with IASB standards.


      b. Are the documents available in English?
      Yes   No


    Section 9B -- Standard-Setting (UK Accounting Standards Board)


    95. For UK Accounting Standards Board, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Agency appointed jointly by government and private sector

      b. Name of standards

      Financial Reporting Standards


    96. How many voting members does the standard-setting body have?
      up to 10


    97. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: 2 employed, up to 8 voluntary


    98. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Not stated, but in practice there appears to be a balanced membership


    99. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Financial Reporting Council (Regulators)


    100. What is the term of appointment for members?
      Year(s)


    101. For how many years has the standard-setting body been in existence?
      14 Year(s)


    102. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      3,810,600

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.80



    103. To what entity is the standard-setting body accountable?
      The Financial Reporting Council


    104. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Draft Standards are exposed for public comment

    2. accessibility of meetings (i.e., public or private)

      Meetings are held in private

    3. approval process for final standards (i.e., majority required to approve final standards)

      Seven members required to vote in favour when the Board has ten members; six when it has less than ten

    4. other relevant due process activities

      Draft standards are sometimes preceded by discussion papers, which are exposed for public comment


    105. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      Day(s)



    Section 10 -- Monitoring (Quality Assurance) and Enforcement


    Responses to the questions in this section will provide a description of the legal and professional framework governing regulation of the profession in your country. Please indicate what role your organization plays within this framework.

    Section 10A -- Securities Market Regulatory Authority


    106. Name the authority that regulates the securities market:
      Financial Services Authority


    107. What responsibilities does this organization have for monitoring and enforcing compliance with accounting, reporting or auditing requirements? Please identify the Legal authority that establishes that responsibility:
      See response to 10D


    108. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      None

    2. accounting and auditing standard-setting

      None

    3. review of financial statements prepared by listed entities, and monitoring of their compliance with the accounting and disclosure requirements

      None, other than through their enforcement of the Listing Rules. This enforcement role is mainly concerned with pre-approval of information supplied with prospectuses or where shareholder approval is required.



    Section 10B -- Stock Exchange


    109. Name the four largest stock exchangers (by market capitalization) and whether it is organized as a profit or not-for-profit organization:
      Profit Not
      for
      profit
      Stock Exchange
      London Stock Exchange
      Alternative Investment Market
      OFEX



    Section 10B -- Stock Exchange
    London Stock Exchange Details


    110. For London Stock Exchange, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.



    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.



    3. How enforcement actions are administered.



    Section 10B -- Stock Exchange
    Alternative Investment Market Details


    110. For Alternative Investment Market, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.



    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.



    3. How enforcement actions are administered.



    Section 10B -- Stock Exchange
    OFEX Details


    110. For OFEX, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.



    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.



    3. How enforcement actions are administered.




    Section 10C -- Regulatory Oversight of the Accounting Profession


    111. Has an audit profession oversight body been established (e.g., to oversee the external quality assurance review process, etc.)?
      Yes   No

      If NO, proceed to the next section.

      If YES, please describe :

    1. What are the name and duties of the oversight body?



    2. The number of members on the oversight body

      The Board of the POBA has 9 members

    3. Its powers



    4. How the oversight body conducts or oversees a program of inspections to assess the degree of compliance of each audit firm/auditor with applicable auditing standards and regulations

      The POBA was launched on 1 April 2004. It has yet to carry out its oversight function sufficiently for an answer to be given to this question. Its authorisation function of recognising supervisory bodies of audit firms/auditors will not commence until enactment of the legislation currently before Parliament. The AIU is due to commence operation during June 2004.

    5. The sanctions the oversight body may impose in the event of non-compliance



    6. How the oversight body is accountable to any public institution or body



    Section 10D -- Banks Regulatory Authority


    112. Name the authority that regulates the banks and similar financial institutions. Discuss how this authority differentiates between accounting requirements for regulatory reporting and general purpose external financial reporting:
      The Financial Services Authority (FSA) is responsible for the regulation of banks, insurers and investment businesses. It is not responsible for regulating accounting services, including those related to the audit and financial reporting of regulated financial services businesses. The FSA sets the accounting (and other) requirements for regulatory reporting purposes and can require regulated businesses to obtain an auditors report on certain matters (such as compliance with client money rules) or to commission special reports. The FSA has no role in setting accounting or auditing requirements for general purpose financial reporting. Although FSA reporting rules generally follow the principles established in accounting standards, it is not required to do so and on occasions the regulatory reporting requirements will differ from financial reporting standards


    113. Discuss briefly the legal requirements with respect to monitoring and enforcement by the regulatory authority of accounting and auditing standards that apply to the banks and similar financial institutions:
      The FSA monitors and enforces regulatory reporting requirements. It has no role in monitoring or enforcing financial reporting or auditing standards. The mechanisms for this in the UK are set out elsewhere in this response.


    114. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      None

    2. accounting and auditing standard-setting

      None

    3. review of financial statements prepared by listed entities

      The FSA may review audited financial statements of regulated bodies as part of its overall supervision of banks. The purpose of this review would be to assess compliance with FSA rules, rather than monitoring of compliance with accounting standards. See Section 10A for description of FSAs future responsibility for compliance with listing rules in the UK.

    4. enforcement of accounting, reporting and auditing requirements

      FSA responsibility is limited to regulatory reporting. It has a range of enforcement tools available against regulated financial services businesses and individuals within those businesses. These include fines, suspension of licenses and criminal prosecution.



    Section 10E -- Non-Banking Financial Institutions Regulatory Authority


    115. Name the regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on non-banking institutions.
      Financial Services Authority see Section 10D for description of FSA responsibilities


    116. What is the source of Legal authority of the regulatory authority(ies)?
      Non-governmental organization established by Financial Services and Markets Act 2000. FSA has a series of high level principles supported by detailed rules. These rules are enacted by Statutory Instrument, which have the status of secondary legislation thereby providing legal authority.


    117. Briefly describe the role of the regulatory authority(ies) as it relates to the following:
    1. regulation of the audit profession

      None

    2. accounting and auditing standard-setting

      None

    3. review of financial statements prepared by listed entities

      The FSA may review audited financial statements of regulated bodies as part of its overall supervision of banks. The purpose of this review would be to assess compliance with FSA rules, rather than monitoring of compliance with accounting standards. See Section 10A for description of FSAs future responsibility for compliance with listing rules in the UK

    4. enforcement of accounting, reporting and auditing requirements

      FSA responsibility is limited to regulatory reporting. It has a range of enforcement tools available against regulated financial services businesses and individuals within those businesses. These include fines, suspension of licenses and criminal prosecution.



    Section 10F -- Insurance Companies Regulatory Authority


    118. Name the regulatory authority responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on insurance companies.
      Financial Services Authority see Section 10D for description of FSA responsibilities


    119. What is the source of Legal authority of the regulatory authority(ies)?
      Non-governmental organization established by Financial Services and Markets Act 2000. FSA has a series of high level principles supported by detailed rules. These rules are enacted by Statutory Instrument, which have the status of secondary legislation thereby providing legal authority.


    120. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      None

    2. accounting and auditing standard-setting

      None

    3. review of financial statements prepared by listed listed entities

      The FSA may review audited financial statements of regulated bodies as part of its overall supervision of banks. The purpose of this review would be to assess compliance with FSA rules, rather than monitoring of compliance with accounting standards. See Section 10A for description of FSAs future responsibility for compliance with listing rules in the UK

    4. enforcement of accounting, reporting and auditing requirements

      FSA responsibility is limited to regulatory reporting. It has a range of enforcement tools available against regulated financial services businesses and individuals within those businesses. These include fines, suspension of licenses and criminal prosecution.



    Section 10G -- Other Regulatory Authority


    121. Name any other regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements.


    122. What is the source of Legal authority of each regulatory authority?


    123. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession



    2. accounting and auditing standard-setting



    3. review of financial statements prepared by listed listed entities

      (1) No responsibility: all review work is undertaken by parts of the independent oversight framework and the Financial Services Authority (see 10 A)

      (2) The Financial Reporting Review Panel (FRRP, a subsidiary of the FRC) considers whether the annual accounts of public companies and large private companies comply with the requirements of the Companies Act 1985 including applicable accounting standards.

      The FRRP can ask directors to explain apparent departures from the accounting requirements. If the FRRP is not satisfied by the directors' explanations it aims to persuade them to adopt a more appropriate accounting treatment. The directors may then voluntarily withdraw their accounts and replace them with revised accounts that correct the matters in error. Depending on the circumstances, the FRRP may accept another form of remedial action - for example, correction of the comparative figures in the next set of annual financial statements. Failing voluntary correction, the FRRP can exercise its powers to secure the necessary revision of the original accounts through a court order


    4. enforcement of accounting, reporting and auditing requirements

      (1) As noted in a. above, the RSBs have a regulatory role in respect of registered audit firms, consider the outcomes of monitoring visits and impose regulatory or disciplinary penalties, in accordance with the terms of the registration.

      While the accountancy bodies do not have direct responsibility for enforcing accounting and auditing standards, all accountancy bodies have disciplinary powers over their members as part of their charters and will investigate complaints and if necessary impose penalties. Failure to follow relevant standards would generally constitute a failure to follow the ethical or technical standards expected of a member and result in action.

      (2) The Accountancy Investigation and Discipline Board (AIDB, a subsidiary of the FRC) will take over the function, for future referrals, of the present Joint Disciplinary Scheme operated by ICAEW and ICAS. The participants in the AIDB are, at present, expected to be the ACCA, CIMA & CIPFA as well as the ICAEW. A publicly-available Scheme, currently being completed, will establish the framework under which the AIDB will operate.

      The remit of the AIDB will cover members and member firms of participating bodies where a matter raises, or appears to raise, important issues affecting the public interest in the UK. Other cases will continue to be dealt with by the individual accountancy body of the member concerned. The channel for referrals to the AIDB for such matters will, as for the JDS, be by the Investigation Committee of a participating accountancy body that has members who appear to be concerned in the matter to be referred. However, the AIDB will also have the power to call in matters (as defined above), after consultation with those participants whose members are involved in the matter, which have not been referred to it by any of the participants.

      The FRRP and FSA also have an enforcement role in respect of public interest companies and listed entities respectively.



    Section 10H -- Quality Assurance


    124. Does any organization of professional accountants/auditors organize a program of quality assurance review to monitor compliance with accounting, reporting and auditing requirements?
      Yes   No

      If NO, proceed to next Section.

      If YES, briefly describe the monitoring and enforcement mechanism.



    125. Under what authority does the organization conduct the program of quality assurance review?


    126. Who performs the review (e.g., one firm reviewing another firm, staff from the national professional organization, contractors, or a combination of these)?
      The ICAEW carries out its audit monitoring functions using its own specialist audit inspection staff. The AIU will, similarly, have its own inspection staff.



    Section 10 I -- Investigation and Discipline


    127. Is there a process for investigating and disciplining the accounting profession in your country?

    128. Which of the following best describes the responsibility for the investigatory and disciplinary function in your country?
      Government or other agencies are solely responsible for this function.
      Government or other agencies have this responsibility, but the member body or bodies participate in the process.
      Government formally delegates this function to the member body or bodies, to exercise on its behalf.
      Member body or bodies have separate and independent processes that operate alongside processes of legal authorities.
      Other (please explain) See Q129.


    129. Please indicate the name of the body or bodies responsible for investigation and discipline.
      Within the ICAEW the Investigation Committee (IC) is responsible for deciding what action to take on reports on the investigation of complaints about misconduct, and the Disciplinary Committee (DC) hears formal complaints referred by the IC.

      In addition, the Accountancy Investigation and Discipline Board (AIDB) is currently being established (within the Financial Reporting Council (FRC) structure) to investigate, and where appropriate to take disciplinary action in relation to, matters that raise or appear to raise important issues affecting the public interest in the UK. The initial participants in the AIDB are likely to be the ICAEW, ACCA, CIMA and CIPFA.



    Responses to the remaining questions in this Section are required if your organization has responsibility for investigation and disciplinary actions.

    130. How many voting members does the body have?
      IC: 18 mem. DC: 16


    131. Are the members of the body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: Non accountant members of committees are paid fees.


    132. What are the criteria considered in selecting members of the body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?



    133. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Appointments are approved by the Institute Council


    134. What is the term of appointment for members?
      3 Year(s)


    135. For how many years has the body been in existence?
      124 Year(s)


    136. Please indicate the budget in US$ of the body for the last fiscal year.
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      84,000,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      1.75 (specify currency)



    137. To what entity is the body accountable?



    138. Approximately how many days per year does the body meet in full session (including teleconferences)?
      Day(s)



     

     

    Disclaimer

    The information contained within the Part 1 Assessment of the Regulatory and Standard-Setting Framework Questionnaires, Part 2 SMO Self-Assessment Questionnaires, and Part 3 SMO Action Plans are based entirely on information provided to IFAC by the IFAC member or associate to which the information relates. Further, the information has been collected by IFAC for the exclusive use and benefit of IFAC and IFAC's members and associates, but is being made available through this website to the general public in the interest of transparency of the IFAC Member Body Compliance Program. While certain efforts are made to validate the information, IFAC undertakes no obligation to confirm or investigate the completeness or accuracy of any of the content of the questionnaire or action plan, now or at any time in the future. Persons accessing the questionnaire or action plan assume full responsibility for the use of the information set forth herein. IFAC does not make any express or implied warranties or representations whatsoever as to any information provided through the questionnaire or action plan, including, without limitation, that the information contained herein will be error-free. IFAC shall not be liable for any damages, including, without limitation, direct, indirect, incidental, special, punitive or consequential damages, that result in any way from your use or reliance on information provided in the questionnaire or action plan. If you need to rely on the information set forth herein for any purpose, you are urged to confirm the information set forth herein with other sources.

    * Indicates organizations that qualify to submit SMO Action Plans biennially

  •