The quality of audits of FTSE350 companies in the UK is improving, according to the latest reviews undertaken by audit watchdog the Financial Reporting Council (FRC).
An examination of audits undertaken by BDO, Grant Thornton, PwC, Deloitte, EY and KPMG found that 81% in 2016–17 required “no more than limited improvements”. In the previous year the figure was 77%.
The FRC noted particular improvements in areas including the use of data analytics, better training and guidance on the use of specialists, as well as developing “significant firm or network-wide audit quality improvement programmes”.
Melanie McLaren, the FRC’s executive director for audit and actuarial regulation, said: “High-quality audit underpins public trust and confidence in business. Audit firm leaderships’ focus on audit quality is a key driver of good audits and is vital to promoting a culture of continuous improvement.
“While the progress made by individual firms differs, all firms are investing in audit quality and have set out further action to improve.”
Along with improving the challenge of management, auditors have been told they should up their game in the design and execution of procedures relating to revenue recognition. They also need to ensure “compliance with ethical and independence requirements”.