The Professional Oversight Board today published regulations requiring auditors of public interest entities to publish on their web-sites annual transparency reports and setting the minimum requirements such reports must meet. The requirements apply in respect of any financial year of a relevant audit firm starting on or after 6 April 2008. The regulations set the legal requirements on auditors of public interest entities to provide specific information about themselves, and for example about their systems of quality control and independence procedures and practices. These follow quite closely the requirements of the Statutory Audit Directive, from which this derives. The regulations come into force on 6 April.

The Professional Oversight Board has published also regulations relating to the UK audit register and examinations.

Paul George, Director of the Oversight Board said:

“We want audit firms to meet the spirit as well as the letter of the requirements for transparency reporting, and in particular to take the opportunity to differentiate themselves, for example by setting out the ways in which they achieve high quality audits. The Audit Quality Framework published in February may provide a helpful framework for such reports. We shall monitor the way in which the firms meet their obligations in practice”.

A number of the largest UK audit firms have published annual transparency reports on a voluntary basis following a 2003 recommendation from the Government-led group set up to consider the implications of Enron for UK audit regulation. However, this is the first time that such reports have been mandatory.

1. The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. Its functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the Committee on Corporate Governance.
2. The Professional Oversight Board contributes to the achievement of the Financial Reporting Council’s own fundamental aim of promoting confidence in corporate reporting and governance. It has four main responsibilities:
   1. a statutory obligation to oversee the regulation of auditors by the recognised accountancy bodies;
   2. the monitoring of the quality of the auditing function in relation to economically significant entities;
   3. independent oversight of the regulation of the accountancy profession by the professional accountancy bodies;
   4. independent oversight of the regulation of the actuarial profession by the professional actuarial bodies.
3. The Professional Oversight Board is independent of the accountancy and actuarial professions. Its members have wide experience of business and the professions, the public sector, accountancy, auditing and actuarial work. The Chairman is Sir John Bourn KCB.
4. The regulations have been made under powers delegated to the Professional Oversight Board from Government under the Companies Act 2006.
5. The POB consulted on the substance of these regulations in the second half of 2006 (POB publications) and set out in May 2007 (POB publications) proposals for taking this forward. Draft regulations were published for consultation in January 2008.
6. The requirements apply only to the auditors of companies that have issued transferable securities admitted to trading on a UK regulated market.
7. Press enquiries should be directed to Paul George, POB Director, on 020 7492 2340.