The Centre for Public Interest Audit’s (CPIA) executive director Dean Beale has said that the UK Financial Reporting Council’s (FRC) latest findings point to audit quality “consolidation” rather than a new acceleration in improvement.
The comment follows the publication of the FRC’s Annual Review of Audit Quality (ARAQ) 2026, which offers a market-wide assessment of audit performance.
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According to the FRC, the review is intended to support better decision-making by combining inspections of audit files with evaluations of companies’ systems of quality management (SoQM).
Beale highlighted that the largest companies have made notable strides compared to a few years ago.
He said: “This improvement is the outcome of almost a decade of sustained investment, significant internal changes – such as the introduction of operational separation and new SoQM – and the FRC overhauling its operations.
“That said, the FRC has highlighted a need to improve the consistency of execution, and firms will need to ensure they maintain their focus. The review reinforces a familiar point: high-quality processes do not automatically guarantee high-quality work on every file.
“SoQMs are essential, but their value depends on whether they change behaviour, improve challenge and support timely intervention during live audits. Meanwhile, impairment and revenue remain some of the more stubborn areas. These require robust testing of assumptions, evidence and management judgement.”
The FRC said overall audit quality continued to improve, but performance remained uneven.
It also identified a clear divide between larger and smaller companies, particularly in the extent of their investment in, and maturity of, SoQMs – arguing that stronger company-wide systems and capabilities are critical to sustaining progress.
Beale, who took up the role last year, added: “The FRC’s report also identifies a gap between the largest firms and smaller firms on audit quality.
“While there has been progress among smaller firms, ensuring they deliver quality audits on a consistent basis is vital for meaningfully increasing choice within the audit market. It is important the FRC continues to work with these firms to enhance their capabilities.”
