FRC publishes audit quality inspection reports for the six largest audit firms

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15 Jun, 2017

The Financial Reporting Council (FRC) has published individual audit quality inspection reports for Deloitte LLP, Ernst & Young LLP, KPMG LLP and KPMG Audit PLC, PricewaterhouseCoopers LLP, BDO LLP and Grant Thornton UK LLP.

The FRC indicates that “the quality of audits of FTSE 350 companies in the UK is improving”.  It highlights that 81% (77% in 2015/16) of FTSE 350 audits reviewed in 2016/17 were categorised as requiring “no more than limited improvements”.  The FRC has set a target that “at least 90% of FTSE 350 audits reviewed should require no more than limited improvements by 2018/19”.  Findings indicate, however that “a higher proportion of audits reviewed outside of the FTSE 350 required more than limited improvements”.  

The reports set out the principal findings arising from the audit quality inspection work carried out by the FRC’s Audit Quality Review (AQR) team for 2016/17. 

The reports focus on the key findings from the reviews, why such findings are important and actions the individual firms are taking to address them in order to safeguard and enhance audit quality.  Key findings address both the FRC’s inspection of individual audits and also each firm’s policies and procedures to support and promote audit quality. 

The reports also identify some examples of good practice which contributed to audit quality at each firm. 

The FRC indicates that it will issue, in July 2017, an overall report on the quality of audit in the UK.  The first report of this type was published in July 2016 with a follow up report in February 2017

The press release and links to individual reports are available on the FRC website.

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