Once the dust has settled over confused interpretations of the FRC’s recent
report on audit quality, mid-tier firms should find themselves in a much
stronger position than they were prior to the report’s release.
When the FRC’s Audit Inspection Unit released its view on audit quality in
the UK, a number of commentators understood the report to say that the other
significant audit firms lacked the quality of the Big Four.
Senior mid-tier figures, however, have taken a much more positive view of the
AIU’s findings. Once their initial irritation over the confusion and mixed
messages subsides, the mid-tier will be well-placed to continue its campaign to
break into the listed audit market dominated by the giant firms.
The AIU’s report on audit quality, it’s second ever, was the first to include
an analysis of the other significant firms. BDO Stoy Hayward, Baker Tilly, Grant
Thornton, PICF and RSM Robson Rhodes.
What mid-tier partners have been so pleased about is that in their first year
of inspection, the issues raised by the AIU have been broadly similar to those
raised when the Big Four were inspected for the first time.
Jeremy Newman, managing partner at BDO Stoy Hayward, said the fact that the
issues raised by the AIU were the same within both the Big Four and mid-tier
showed that other significant firms were just as good as PricewaterhouseCoopers,
Deloitte, KPMG and Ernst & Young.
‘The fact that the AIU’s findings at mid-tier firms were broadly the same as
those at the Big Four on their first inspection shows that there are not vast
gaps in audit quality,’ said Newman.
His views were echoed by Nigel Tristem, head of audit at Baker Tilly, who
said the findings would provide a timely boost to the profile of mid-tier firms.
‘I certainly think that the report’s findings will benefit us, as the
findings on the Big Four and other firms were broadly consistent,’ said Tristem.
These issues included focusing on audit quality, remuneration and staff
appraisal, resources and the implementation of ethical standards.
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