15 firms lose audit licenses

Some 15 accounting firms have had their audit licenses revoked after site
visits by leading accounting institutes found that they were not doing enough to
improve their audit work.

The figures were disclosed in a report for the DTI on UK audit regulation by
the chartered accountancy institutes of England and Wales, Scotland and Ireland.

The release of the report comes at a time when government has been shifting
responsibility for the 95 audit firms with listed clients away from the
Institutes to the Financial Reporting Council’s Audit Inspection Unit.

John Hobbs, chairman of the joint audit committee for the three Institutes,
however, said they would still have an important role to play in future audit

‘This has been another year of change as the Government’s revisions to the
audit regulatory arrangements, under the control of the FRC, are implemented,’
said Hobbs.

‘Under the new arrangements, the institutes retain their full supervisory
role. So we are still responsible for registering all firms and taking any
decisions about continued registration.’

The institutes undertook 1,114 site visits of the 6,897 registered firms in
2004 and found that 88% of the firms visited required no action to improve their
audit standards or had a suitable plan in place to do so.

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