UK audit watchdog slams firms for ‘quality of work’

Bloomberg

The UK’s accounting watchdog blasted Mazars and BDO for the “unacceptable” quality of their audits after carrying out an annual review of the industry’s seven largest firms.
The Financial Reporting Council (FRC) said that four of the eight audits reviewed at Mazars and five of the 12 audits reviewed at BDO required more than limited improvements. The regulator added that supervisory plans have been developed in a bid to remedy the concerns.
Mazars said in a statement that it’s “committed to addressing the issues” and that it will continue to invest in applying the highest quality standards. Scott Knight, head of audit at BDO, said the firm “will continue to work hard to fully address the FRC’s findings,” adding that staffing was increased to improve quality.
Overall, the FRC highlighted improvement in the sector. It said that 75% of all audits inspected were good or required limited improvement, up from 71% in last year’s review and 67% the previous year.
“It is clear that a combination of the FRC’s increasingly assertive supervision approach, as well as investment from the firms in their systems, people and capabilities to improve audit quality, is starting to have a positive impact,” the regulator said in a press release.
After criticising KPMG last year, the FRC said its individual audit inspections have significantly improved and added that officials will continue to closely monitor the firm’s banking audits.
The UK is bringing in sweeping audit reforms aimed at reining in the dominance of the largest accountancy firms and cleaning up the industry following a string of high-profile scandals.