Last week the Audit Inspection Unit suggested its reports on individual audit firms could be made public, leading to the possibility of ‘naming and shaming’ poor audit firms.

It was a surprising move, because all the signs were that the status quo would be favoured. But even so, the principle of generalised reporting looked, to outsiders, hopelessly inadequate.

But in June last year, when the consultation first opened, the announcement this week did not look a likely prospect.

Sir John Bourn, head of the Professional Oversight Board, said then that the board was keen to keep the fundamentals of the current model in place. ‘Giving audit firms the opportunity to correct weaknesses on the basis of private reports, and only “naming and shaming” where the response is inadequate, provides the strongest incentive for firms to take action,’ Bourn said.

But in a surprising ambush, the Tories and cross-benchers forced through an amendment to the companies bill in November of last year putting the POB within the scope of the Freedom of Information Act.

Baroness Noakes, the Tory peer who proposed the amendment, protested that audit quality reports on the work of major accountancy firms would otherwise continue to remain private, with the publication of ‘only the blandest summaries, despite the requirement under corporate governance rules for

the audit committees of company boards to make judgments about the effectiveness of their auditors’.

Big Four sources say that was a critical moment. If the AIU had wanted to continue publishing ‘the blandest summaries,’ then audit committee chairs and journalists would have requested the individual reports under the FOI provisions. Refusal at that stage would have looked evasive at best, and arguably undermined confidence in the profession.

What can firms expect of the reports, and what do they think?

One PCAOB report, issued about Ernst & Young’s US firm in 2005 highlighted ‘deficiencies’, adding: ‘In some cases, the deficiencies identified were of such significance that it appeared to the inspection team that the firm had not, at the time it issued its audit report, obtained sufficient competent evidential matter to support its opinion on the issuer’s financial statements.’

Whether or not the AIU will be so uncompromising or, indeed, whether there are such problems in UK accounting to uncover, remain to be seen.

Some of the mid-tier, keen to prove that they are just as good as the Big Four, have welcomed the moves.

BDO Stoy Hayward managing partner, Jeremy Newman, said: ‘We hope all initiatives to increase transparency of the outcomes of independent audit inspections will help to break down institutionalised prejudice about audit quality and the prevailing assumptions that bigger means better in this context.’

Grant Thornton backed the idea of opening up the reporting last year, and the Big Four have also offered support for the moves.

Peter Wyman, head of professional affairs at PricewaterhouseCoopers, said: ‘We’ve reached the stage where something along the lines of what they’re proposing is right and appropriate.’

KPMG’s head of audit, Richard Bennison, said: ‘Generally, I think we accept that there has to be some enhanced disclosure of what the AIU is doing and finding on individual firms. The key is in the reporting.’

All emphasised that they wanted the reports to be balanced. Martyn Jones of Deloitte said: ‘A matter that is very important for firms is that the reporting is balanced, so that it can highlight the features of the audit firms, giving proper weight to the good things that the firms do by way of developing the right approach to promoting audit quality.’

The news may be most welcome to the legal profession, cynics will also argue. PCAOB reports regularly involve legal wranglings, and most parties, including the regulator, have alluded to the ‘possibility’ of legal involvement.

Whatever happens, we may soon know more about how UK audits are conducted, and whether, in each case, they are up to scratch.