Watchdog issues audit quality warning

The quality of company audits is at risk due to conflicts of interest and
poor legal compliance, according to the Financial Reporting Council, the
accounting watchdog.

It revealed the findings from its first assessment into 27 audits of leading
UK companies.

The FRC also referred two FTSE350 audits to its review panel following
concerns that accounting rules had not been applied properly.

It also suggested that senior auditors were still maintaining relationships
with audit clients after they had stepped down from the role.

However the regulator said it had not discovered any systemic problems within
audit policies, procedures or systems.

It added that the UK had an appropriate audit framework, with the vast
majority of audit judgments made correctly.

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