UK: FRC audit inspection results published

The Financial Reporting Council has today published the results of its most recent audit inspections, relating (on the whole) to the audits of companies with a December 2017 year end: see here. The inspections covered seven audit firms and the FRC reports that it found cases in all of them where auditors had failed to challenge management sufficiently on matters of judgement. Overall, the FRC classed 75% of the FTSE350 audits it inspected as being good or requiring limited improvements. The remaining 25% were assessed as being below an acceptable standard.

The FRC notes that there have been changes in individual audit firm performance. At Grant Thornton, for example, only half of the reviewed audits were classed as good or requiring limited improvement (down from 75% in the previous year). The FRC states that Grant Thornton is now under increased scrutiny. The firm announced, last year, that it had stopped tendering for FTSE350 external audit engagements, citing the cost involved: see here. It announced, last month, some of the actions it had taken (and will take) to address the concerns raised by the FRC: see here.