News July 2020 Results of FRC audit inspections

Results of FRC audit inspections

14 July 2020
The Financial Reporting Council (FRC) has today released its latest audit inspection results.
Each year the FRC reports publicly on the findings of its inspection activity at the seven largest firms. Together with an assessment of each firm’s quality control systems, the Audit Quality Review (AQR) team reviewed 88 audits across these firms and concluded that only two thirds of the audits were of a good standard or required limited improvement.
In the reports, the FRC sets out a number of significant steps that it is taking or intends to take in the short to medium term to ensure that the audit firms take swift actions to respond robustly to our concerns.
The FRC’s Executive Director of Supervision, David Rule said:

We are concerned that firms are still not consistently achieving the necessary level of audit quality. While firms have made some improvements and we have observed instances of good practice, it is clear that further progress is required. The tone from the top at the firms needs to support a culture of challenge and to back auditors making tough decisions.”

A link to the seven inspection reports can be viewed here.
In the 2019/2020 period, the priority sectors for inspection were Financial Services, General Retailers, Business Support Services, Construction and Materials, and Retail Property. During the inspection the FRC focused their activities on the following issues: going concern and the viability statement, the other information in the annual report, long-term contracts, the impairment of assets and fraud risk assessment.

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