The audit profession is very closely monitored and tightly regulated according to stringent professional standards and legislation. Any breach of these rules can have severe consequences for the individual or firm involved.
"An audit is the process of checking that the way an organisation presents information about its financial position (its ‘Financial Statement of Accounts’) is true and fair. In essence, ‘true and fair’ means that, in the auditor’s opinion, the company’s financial statements offer a true and fair view of its actual financial position, and that any assumptions they include are reasonable."
Three main groups are responsible for regulating and overseeing the way audits are carried out:
- The government, through legislation such as the Companies (Audit, Inspection and Community Enterprise) Act 2004, Companies Act 2006 and the Statutory Auditors and Third Country Auditors Regulations 2007, sets out the law and decides who should oversee the work of auditors.
- The Financial Reporting Council (an independent body given powers to watch over the audit profession by the government) works closely with accountancy organisations such as AIA to oversee the regulation of our RPQ, and independently assesses the quality of audits carried out on behalf particularly large or important organisations.
- Recognised Qualifying Bodies (RQBs) like AIA are responsible for the way that auditors are trained and qualified and Recognised Supervisory Bodies (RSBs) are responsible for supervising auditors' work.
AIA is a Recognised Qualifying Body and is supervised by The Financial Reporting Council.