Big Four audit quality ‘in decline’
0The Financial Reporting Council has criticised the quality of audit inspections by the Big Four audit firms in a report this week. Announcing the results from its recent inspections, the FRC said that 72% of audits required no more than limited improvements in 2017–18, compared with 78% in 2016/17.
The council said that the fall in quality among the Big Four — Deloitte, Ernst & Young, KPMG and PwC — was due to a failure to challenge management and show appropriate scepticism across their audits, along with poorer results for audits carried out on banks.
Stephen Haddrill, chief executive of the FRC, said: “At a time when public trust in business and in audit is in the spotlight, the Big Four must improve the quality of their audits and do so quickly.
“They must address urgently several factors that are vital to audit, including the level of challenge and scepticism by auditors, in particular in their bank audits.
“We also expect improvements in group audits and in the audit of pension balances.”
The FRC called the deterioration in audit quality at KPMG “unacceptable” after the number of its audits requiring more than just limited improvements rose to 50% from 35% last year.
