The Financial Reporting Council (FRC) is consulting on proposals to revise its review standard for interim financial statements, to ensure the level of work carried out by auditors reflects wider expectations on going concern
The regulator said its specific objective in performing this limited revision to the International Standard for Review Engagement (UK) 2410 (ISRE (UK) 2410 is to address a potential lack of clarity in relation to going concern when performing a review of interim financial information.
There have been no revisions to the standard, either at the international or UK level, since it was originally issued in 2007.
The FRC has recently reviewed ISRE (UK) 2410 in the context of changes to auditing standards, particularly ISA (UK) 570 Going Concern. As a result, the FRC is proposing to revise parts of ISRE (UK) 2410 to ensure it remains fit for purpose in the current environment.
Though an auditor review undertaken in line with ISRE (UK) 2410 is not an audit, and thus the ISAs (UK) do not directly apply, the work is linked and the FRC said it believes there is significant value in aligning requirements on going concern across the audit of financial statements and the review of interim financial statements, whilst still acknowledging the differing levels of assurance these engagements provide.
The FRC's revisions are limited to those areas which address going concern. A full revision was considered but ultimately not immediately pursued owing to potential overlap with recommendations from the Brydon report relating to material outside the financial statements.
However the FRC is interested in respondents’ views on a potentially more systematic revision of ISRE (UK) 2410 in the future, and as such, welcome comments on both the specific revisions to ISRE (UK) 2410 and on reviews of interim financial statements as a whole.
The consultation runs until 19 February 2021.