Standards of audit quality for FTSE 350 companies in UK is improving, according to a second annual report, Developments in Audit published by the UK Financial Reporting Council (FRC).

The report is based on the FRC’s audit monitoring activities on the quality of individual audits of public interest entities (PIEs) and from the thematic reviews focusing on certain aspects of PIE audit firms as well as their audit practices. The report also draws on the information from the professional bodies on their inspection of non-PIE audits.

In a statement published by FRC, over £12.5 million of sanctions on auditors and audit firms have been issued by FRC in 2016/17.

The quality of the FTSE 350 audits inspected improved with 81% in 2016/17 classified as either good or with limited improvements required compared to 77% in the previous year and 68% four years ago.

Audits of FTSE 100 have also improved in the last year with 92% of them categorised as either good or require limited improvements compared to 65% in the previous year.

However, a large proportion of non-FTSE 350 audits required more than limited improvements.

FRC executive director for audit and actuarial regulation Melanie McLaren said: “In our monitoring of audit quality we have yet to see overwhelming evidence of improvement in all sections of the market or the consistency of performance we want between different firms. Firms are though investing in improvement measures, and those Audit Committees surveyed report that they are seeing evidence of good quality audit.”

The full report can be accessed here.