Auditing and Assurance Standards and Guidance

FRC Practice Notes

PN 10 (Revised) Audit of financial statements of public sector bodies in the UK (October 2010)

ISA (UK and Ireland) 500: Audit Evidence

Objective

The objective of the auditor is to design and perform audit procedures in such a way as to enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor's opinion. (Paragraph 4)

141

In the public sector, the auditor obtains sufficient audit evidence to support the regularity assertion. Entities will usually have established internal controls designed to secure the regularity of transactions. However, where the audited entity is responsible for giving grants or other financial assistance to other parties, it is often the case that the regularity of the transaction will depend on the other parties satisfying the criteria and meeting the terms for receiving assistance. Evidence might then be required on the entity's exercise of its responsibilities to satisfy itself about the transactions of these other parties. Guidance on audit evidence for regularity work is set out in the separate section in this Practice Note on regularity.

142

In the public sector financial statements may also include specific statutory notation, for instance fees and charges type disclosures which are required under the relevant applicable reporting framework. Where the entity makes non-GAAP disclosures in accordance with the applicable framework then this is subject to audit testing.