Original recommendation

The Kingman Review recommended that the new regulator should work towards a position where individual audit quality inspection reports, including gradings, are published in full upon completion of AQRs. It indicated that this would, however, be a major step, requiring a high level of confidence in the AQR process. For the present, as a first and interim step, the Review recommended publication of AQR reports on an anonymised basis. (Source: Kingman 20)

Proposals

To ensure higher levels of transparency as to the performance of PIE auditors, the Government (Section 9.2) intends to legislate to allow AQR reports on individual audits to be published by the regulator without the need for consent from the audit firm and the audited entity. The regulator will be free to decide whether this is publication “in full” or in summary form. The Government will put in place safeguards to prohibit the publication of sensitive information about audited entities.

Government response

The Government is asking the FRC to look at non-legislative ways of improving the AQR process and continuing to seek consent from audit firms and audited entities where possible before publication. In addition, the Government is asking the regulator to engage with investors and other users to improve the usefulness of the information published in an AQR report.