The FRC reviewed 15 audits across the seven largest audit firms covering both the financial statement opinion and the Value for Money arrangements conclusion work. The FRC paid particular attention to the valuation of property (including investment property), multi-employer pension deficits, occurrence and completeness of expenditure, first year audit procedures, the impairment of receivables and the fraud risk assessment and response thereto.

The FRC indicates that the results of its inspections were “concerning” with just 40% (down from 64% in 2018/19) of the audits requiring no more than limited improvement. It comments that “overall, some firms are still not consistently achieving the necessary level of audit quality and therefore need to make further progress”. Most of the findings leading to reviews requiring more than limited improvements were identified in the areas of property valuation (including investment property), sufficiency of audit procedures over the occurrence and completeness of expenditure, the response to fraud risks, the impairment of receivables, valuation of pension assets and the effectiveness of the Engagement Quality Control Review.

With regards to Value for Money conclusion work, the FRC observed that “the quality of VfM conclusion work across all firms remains high”. All 15 reviews were assessed as either good or requiring limited improvements and, unlike the prior year, no reviews were graded as requiring improvement.

A press release and the full report is available on the FRC website.