2

Logistical and timing issues

2.1

The questions the PRA expects auditors to answer in their reports each year are broadly the same across all the audited firms in scope for that year. The questions can vary from year to year, although some may be repeated. To the extent possible, the PRA will keep the overall expected burden represented by the questions stable from year to year, although in a year of major change, for example the implementation of a major new accounting standard such as International Financial Reporting Standard (IFRS) 9, the number or extensiveness of the questions is likely to rise on a temporary basis. The PRA expects to set questions that are within the scope of a normal high quality audit.

2.2

The timing of agreement of the questions and the submission of the final report is in line with the statutory audit cycle around planning and final completion respectively.

2.3

To facilitate effective planning for the reporting, the PRA will discuss with auditors the scope of the report, including the level of application of the requirement, and decide this by the end of the second quarter of each financial year. As to the level of application, the PRA expects auditors to take a pragmatic approach when fulfilling their obligations, by for example preparing a single report in those cases where more than one firm in a group is within the requirement’s scope. The timetable for deciding the questions will be sent to the auditors each year in the first quarter and auditors should use their best endeavours to help the PRA reach a decision by the end of the second quarter under their general duty to co-operate with the PRA. When a decision on the scope of the report is reached, no further questions may be added before the report is due to be submitted; if the PRA wishes to raise any other questions with the auditors this will be done orally during the bilateral meeting and only an oral response will be expected.

2.4

The report should be submitted to the firm’s supervisor at the PRA within four months of the end of the relevant financial year. This deadline is designed to provide sufficient leeway for the auditors to complete their audit procedures and sign off on the statutory financial statements which are generally required to be issued to a shorter deadline (but in any case for listed entities matches the deadline for issuing the annual report under the FCA’s Disclosure and Transparency Rules).[1]

2.5

The auditors will nevertheless be expected to submit the report as soon as possible following the completion of their audit. Auditors may consult with the PRA, through the relevant supervisor, before submission of the report, in order to ensure the PRA’s expectations about the content will be met and that the report fully covers the agreed scope. This can be at any stage during the audit with the aim of allowing timely clarification on any areas of uncertainty in what is being sought through particular questions. Meetings are arranged to discuss issues arising from the questions if necessary.

2.6

The physical format of the report is not mandated. All questions should be answered, if relevant, and to an appropriate standard (see further below). Reports should be clear, understandable by supervisors broadly on a stand-alone basis, and as concise as a full set of information allows.