26th July 2021
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Almost a third of audits require improvement or significant improvement, according to a new report published by the Financial Reporting Council (FRC).
In its audit quality review (AQR), the auditor and accountant regulator found that 29% of audits reviewed needed improvement, while quality across firms was significantly mixed.
Sir Jon Thompson, chief executive at the FRC, said:
“While these results show some improvement on last year’s results, this improvement is marginal and significant change still needs to happen to meaningfully improve audit quality.
“If the UK is to retain its position as a world leading professional services marketplace, and a global financial centre, outstanding audit quality and rigorous professionalism is at the heart of this.”
The Institute of Chartered Accountants in England and Wales (ICAEW) has criticised FCR’s AQR following its latest findings.
The managing director of the ICAEW, Ian Wright, said that the AQR focuses too heavily on the wrong factors like reputation and influence, adding:
“It is absolutely right to inspect the work of audit firms and hold them to account.
“We want to see better audits in a resilient market, with greater competition and choice for businesses. However, in its present form, the FRC annual AQR process has lost its way.”
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