From its commencement on 1 April 2013, the Prudential Regulation Authority (PRA) has adopted a number of legacy Financial Services Authority (FSA) policy publications relevant to the advancement of its objectives. This document, initially issued by the FSA as Code of practice for the relationship between the external auditor and the supervisor (FG11/09), has been adopted and revised by the PRA as a Supervisory Statement as part of this process.
As a result of the financial crisis, the FSA recognised the need to engage more effectively with auditors. A Code of Practice for the relationship between the external auditor and the supervisor was published in May 2011. The PRA makes the following Supervisory Statement, which adopts the Code previously issued by the FSA, but contains modifications to ensure that it refers to the PRA and its supervisory approach. By issuing this statement, the PRA meets its obligations under FSMA 339A to issue and maintain a code of practice describing how it will comply with FSMA 339A (1).
Summary of the key issues
The Supervisory Statement sets out principles to guide interactions between supervisors and external auditors. It recognises that timely, relevant information sharing is an essential part of an effective working relationship, and it indicates a minimum level of bilateral and trilateral meetings that should take place for each “impact category” of firms.