Update 5 March 2019
This Supervisory Statement (SS) (available under ‘current version’ below) was updated following Policy Statement 6/19 Responses to Chapters 3-7 of CP24/18 ‘Occasional Consultation Paper’
Published on 21 January 2016
This supervisory statement sets out the Prudential Regulation Authority’s (PRA) expectation of auditors in relation to the requirement to provide written reports to the PRA concerning the audit of major banks and building societies as laid out in Chapter 8 of the Auditors Part of the PRA Rulebook and should be read in conjunction with that chapter. It is published alongside Policy Statement 1/16 ‘Engagement between external auditors and supervisors and commencing the PRA’s disciplinary powers over external auditors and actuaries’, and an update to ‘The Prudential Regulation Authority’s approach to enforcement: statutory statements of policy and procedure’ (see Related links).
Auditors should refer to this statement both at the stage where the questions are discussed and agreed and when the report is being prepared and submitted. The regime will give auditors earlier and more consistent insights into regulatory concerns that may be relevant to their statutory audit in advance of their main audit work, and will encourage supervisors to focus on questions which are most relevant to what auditors do during the statutory audit that are also of interest to prudential supervisors. Overall, the purpose is to improve the quality, focus, and discipline of the auditor-supervisor dialogue, so as to identify and address emerging concerns more effectively and so support the PRA’s statutory objectives regarding safety and soundness.
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 statement includes chapters on: logistical and timing issues; scope of questions and content of report; disclosure of the report; cooperation with the PRA and interaction with other duties; and duties of auditors and firms.