FRC publishes research on Audit Committee Chairs' views on, and approach to, audit quality

  • FRC Image

28 Jan, 2022

The Financial Reporting Council (FRC) has published the results of its latest research which looked at audit committee chair's views on, and approach to, audit quality.

The independent research, which builds on similar research in 2020, reinforces the case for developing standards for Audit Committees to help promote a more consistent approach to audit quality.

The research, conducted by YouGov, was based on in-depth interviews with 50 Audit Committee Chairs (ACCs) of Public Interest Entities (PIEs).  The interviews explored:

  • Defining a good quality, and a poor quality, audit;
  • Planning and executing an audit, including evidence gathering and communication with auditors;
  • Reporting on audit quality;
  • The audit tender process;
  • Changes in the audit sector, including familiarity with AQIs;
  • The future of the FRC, and as it transforms into the Audit, Reporting and Governance Authority.

There were a range of different views expressed on audit quality.  The ACCs interviewed highlighted that proper planning - alongside knowledge of the business and the specific sector - communication, and timeliness from the audit team were characteristics of a good quality audit.  The research indicated that the lead audit partner also has a significant impact on perceptions of audit quality.  Some ACCs continue to find it difficult to differentiate audit quality from the quality of service provided by their audit firm. 

When selecting an auditor the ACCs look for expertise, consistency and professionalism of the audit team as well as an understanding of the business.  Audit Committee Chairs consider the ability to build a rapport important and that it is critical that the auditor shows a healthy level of scepticism and offers robust challenge. 

Audit quality is taken very seriously by ACCs and the research highlighted that they are particularly alert to this during the audit tendering process with mandatory tendering being seen as an opportunity to encourage innovation by prospective auditors.  Many ACC were 'pleasantly surprised' by the response by audit firms to the pandemic but did note that the pandemic has impacted the ability to have informal interaction with audit firms and has resulted in more formal and structured interactions between the ACC and the lead audit partner.

The press release and full research are available on the FRC website. 

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.