FRC finds nearly third of audits flawed

THE UK’s accounting watchdog today said nearly one-third of audits which it has inspected recently require improvement, with Big Four firm KPMG among those singled out.

The Financial Reporting Council published its annual inspection and supervision results for 2020/21 covering the seven largest audit firms.

There were 103 audit reviews, and the watchdog found that 29% required improvement or significant improvement. A year earlier 33% were said to have needed improvements.

FRC chief executive Sir Jon Thompson said although there was some progress, “significant change still needs to happen to meaningfully improve audit quality”.

The FRC said for the third year running it found improvements were required to KPMG’s audits of “banks and similar entities”.

Cath Burnet at KPMG UK said the findings do not call into question the firm’s audit opinions. Burnet said the group is confident that steps it has taken will result in improvements.

Improvement measures are also expected of BDO and Mazars.