The Financial Reporting Council (FRC) issued a consultation on 22 June 2022 on publishing audit quality indicators (AQIs) for the largest UK audit firms. This would provide users of audited information with greater detail on audit firms’ efforts to deliver high quality audit.
There is currently limited available information that compares audit quality between firms. Setting out AQIs to enable discussions between Audit Committee Chairs (ACCs) and audit firms on the drivers of audit quality would help ACCs make more informed comparisons between firms when appointing external auditors.
The 11 proposed AQIs would provide stakeholders with comparable indicators on perceived culture within an audit firm, audit quality inspection results, staff workloads and the level of partners’ involvement in individual audits.
FRC executive director of supervision Sarah Rapson said: “Stakeholders have been clear there is a need for concise and comparable audit quality indicators to improve transparency and drive audit quality improvements.
Greater transparency and comparability will further help to shine a light on firms’ efforts to deliver high quality audit. We welcome stakeholders’ further views on what indicators will most assist in driving the audit quality conversation between users and the firms.”
The deadline for responses to the consultation is 18 August 2022.
Subject to consultation responses, the FRC proposes that firms start collecting data for the selected AQIs from 1 April 2023 (if not already doing so). This is with a view to reporting them to the FRC by the end of May 2024, for publication shortly after.