Following its review of the six largest audit firms, The UK Financial Reporting Council (FRC) has said that firms’ audit quality procedures were not strong enough and has published good practices to help firms improve.
The FRC reviewed six of the largest audit firms in its report and 26 audits were selected from FTSE 100, FTSE 250 and other listed companies to observe the key aspects of the audit quality control systems used by firms to support their audit teams in delivering quality audits.
The FRC concluded that the firms’ audit quality procedures were not sufficiently robust as one third of the audits it reviewed require more than just limited improvements.
To help the firm improve, the FRC has published its Audit Quality Thematic Review, which highlights good practices, these include:
- Having a dedicated board or committee to oversee all matter relating to audit quality
- Initiatives to achieve consistent audit quality, identify areas for improvements and monitor the effectiveness of training in specific areas requiring improvement
- Audits with a higher level of partner and director involvement had a greater likelihood of achieving a high quality outcome prior to issue of the audit report
The full report is accessible online