FRC’s latest audit quality review suggests consolidation, says CPIA

The Centre for Public Interest Audit's (CPIA) enforcement manager Dean Beale has said that the UK Financial Reporting Council's (FRC) latest findings constituent to audit prime "consolidation" alternatively than a caller acceleration successful improvement.

The remark follows the work of the FRC's Annual Review of Audit Quality (ARAQ) 2026, which offers a market-wide appraisal of audit performance.

According to the FRC, the reappraisal is intended to enactment amended decision-making by combining inspections of audit files with evaluations of companies' systems of prime absorption (SoQM).

Beale highlighted that the largest companies person made notable strides compared to a fewer years ago.

He said: "This betterment is the result of astir a decennary of sustained investment, important interior changes – specified arsenic the instauration of operational separation and caller SoQM – and the FRC overhauling its operations.

"That said, the FRC has highlighted a request to amended the consistency of execution, and firms volition request to guarantee they support their focus. The reappraisal reinforces a acquainted point: high-quality processes bash not automatically warrant high-quality enactment connected each file.

"SoQMs are essential, but their worth depends connected whether they alteration behaviour, amended situation and enactment timely involution during unrecorded audits. Meanwhile, impairment and gross stay immoderate of the much stubborn areas. These necessitate robust investigating of assumptions, grounds and absorption judgement."

The FRC said wide audit prime continued to improve, but show remained uneven.

It besides identified a wide disagreement betwixt larger and smaller companies, peculiarly successful the grade of their concern in, and maturity of, SoQMs – arguing that stronger company-wide systems and capabilities are captious to sustaining progress.

Beale, who took up the relation past year, added: "The FRC's study besides identifies a spread betwixt the largest firms and smaller firms connected audit quality.

"While determination has been advancement among smaller firms, ensuring they present prime audits connected a accordant ground is captious for meaningfully expanding prime wrong the audit market. It is important the FRC continues to enactment with these firms to heighten their capabilities."

"FRC's latest audit prime reappraisal suggests consolidation, says CPIA" was primitively created and published by The Accountant, a GlobalData owned brand.