FRC warns of 'unacceptable' quality among smaller audit firms
By Josh White
Date: Thursday 18 Nov 2021
(Sharecast News) - The Financial Reporting Council (FRC) warned on Thursday that professional scepticism and management challenges were still the two key areas of deficiency among audit firms.
In its latest annual assessment of UK audit firms, the FRC said that after increasing the number of inspections of smaller firms over the last year, it found 10 of 16 audits reviewed required improvements.
The council described that level of quality as "unacceptable", leading to it increasing its resources dedicated to supervising smaller firms.
On the bright side, however, the FRC said it noted the delaying of audit opinion sign-offs to ensure sufficient time was available was taking place, along with "robust challenge" of the component auditor's work by group auditors.
"While it is encouraging that today's report finds some of the audit firms are successfully implementing improvement measures, audit quality remains mixed across the firms," said Sarah Rapson, the FRC's executive director of supervision.
"As we continue to lay the groundwork for establishing a new regulator - the Audit, Reporting and Governance Authority - our continued objective will be to drive all firms to deliver consistent, high-quality audits to the benefit of all stakeholders and the wider public."
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