CPIA Comments on FRC’s Audit Quality Review Highlight Consolidation
The Centre for Public Interest Audit (CPIA) has noted that the UK Financial Reporting Council's (FRC) latest Annual Review of Audit Quality (ARAQ) indicates a period of consolidation rather than rapid improvement in audit quality. The report, which assesses market-wide performance through audits and systems evaluations, highlights progress among larger firms but uneven results overall. CPIA’s executive director Dean Beale emphasized that while improvements stem from long-term investments and structural changes like operational separation and new Systems of Quality Management (SoQM), consistency in execution remains a challenge. He stressed the importance of ensuring these processes lead to better behavior, stronger challenges during audits, and timely interventions. The FRC also pointed out persistent issues around impairment and revenue areas that require more rigorous testing. Smaller firms lag behind larger ones in audit quality maturity, with Beale calling for continued support from the regulator to improve consistency among them.
Topics: auditing standards financial reporting quality management systems