Following the discussion paper and wider work in this area, a number of actions have already been taken to enhance the role of auditors including:

• development of a draft code of practice by the FSA, alongside the Bank of England, designed to enhance the dialogue between auditors and supervisors;
• increased dialogue between the FSA and auditors, individually and collectively, to discuss key financial reporting issues;
• increased and more effective use by the FSA of section 166 skilled person reporting; and
• formalisation of cooperative arrangements between the FSA and the FRC’s Audit Inspection Unit, in a memorandum of understanding.

In addition, the FRC published the feedback to its discussion paper: 'Auditor Scepticism: Raising the Bar'. The FRC confirms in this paper that it will continue to monitor the extent to which professional scepticism is being applied by auditors. The FRC has also announced a number of measures designed to ensure a consistent understanding of the nature and role of auditor scepticism and appropriate support for, and transparency of, its application.

Both the FSA and the FRC expect these measures to contribute to effective auditing and higher quality disclosures in firms’ annual reports and are encouraging auditors to share any observations or concerns about the adequacy of firms’ disclosures with the FSA.

Following the current financial reporting season, the FSA and the FRC will evaluate the effectiveness of increased engagement with auditors, the quality of disclosure in annual reports and application of professional scepticism by auditors, and will provide further feedback to auditors and firms.

Press release