Jeremy Newman, the managing partner of mid-tier firm BDO Stoy Hayward has
said that FRC’s latest Audit Inspection Unit report shows that mid-tier audits
match the quality of the Big Four.
The report on UK audit quality was the second conducted by AIU and the first
to include inspections of mid-tier firms in addition to the Big Four.
In the report the AIU said that the issues affecting mid-tier firms, which
were inspected for the first time, were similar to those raised when the unit
inspected Big Four firms for the first time.
Newman said this showed that there was no gulf in quality between the giant
firms and the mid-tier.
‘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,’ he said.
Newman scoffed at suggestions that the AIU’s concerns over the ability of
some mid-tier firms to cope with regulatory change indicated a gap in quality to
the Big Four.
The AIU said that the resources at some mid-tier firms had been stretched
because of regulatory changes. But Newman said that because the mid-tier firms
inspected by the AIU were so diverse it was difficult to draw conclusions on the
overall quality of the mid-tier from the report.
He added that the mid-tier was in actual fact likely to respond more
efficiently to the AIU’s recommendations than the Big Four had done.
‘The Big Four, which controls and dominate the audit market, had to address a
number of issues raised by the AIU last year, a number of which were cultural.
After a 12-month period they still haven’t fully resolved these issues,’ said
Newman. ‘We are more flexible and will respond more quickly.’
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