Reports on audit quality reviews of the six largest audit firms have been published today by the FRC.The reports set out the principal findings arising from the 2015/16 reviews of BDO, Deloitte, EY, Grant Thornton, KPMG and PwC.
The FRC has responded to feedback, from audit committee chairs and others, as to how the content of its reports on individual firms could be further developed to provide more useful information. The reports focus on the key findings of our reviews, why they matter and the actions the firms are taking to address them. The key findings reported cover matters arising from the FRC’s reviews of both individual audits and each firm’s policies and procedures to support and promote audit quality, with the balance of findings in these two areas differing significantly between the six firms.
The reports also set out some examples of good practice identified at each firm that contributed to audit quality.
Melanie McLaren, FRC’s Executive Director for Audit, said:
This year’s reports on our reviews of individual audit firms reflect the FRC’s focus on promoting continuous improvement in audit quality. For the first time, we asked the firms to carry out a root cause analysis into each of our key findings before developing proposed actions and discussing these with us. The firms responded positively to this request and engaged in a constructive dialogue with us on the outcome of their work and how this had informed the actions they intend to take. We are pleased that the firms have recognised the opportunity to demonstrate their commitment to audit quality. We will be reviewing the implementation of firms’ actions and the extent to which they are effective in practice in enhancing audit quality
Later in 2016 the FRC intends to issue, in view of its forthcoming role as the UK’s competent authority for audit, its first report monitoring and assessing developments in UK audit quality encompassing developments in standards and policy, professional oversight, audit quality review and enforcement.