RegulationAccounting StandardsAudit firms need to compete on quality: FRC

Audit firms need to compete on quality: FRC

FRC releases report on firms' transparency

The UK’s reporting regulator has asked the UK’s largest accounting firms to
compete on quality, according to a report released moments ago.

The Financial Reporting Council (FRC) has released its review of audit firms’
transparency reports, brought in to make audit firms more transparent about
their internal systems and revenues.

The council said while it was pleased with the overall standard of reports,
there remained “limited evidence of firms attempting to distinguish between
themselves, and hence compete, on quality”.

“Although this year’s reports were in general of higher quality than the
voluntary reports looked at previously, very few reports met all of the
requirements,” the council said.

“There were also a number of common themes emerging, in particular, we would
like firms to improve the quality of their disclosures in …international
networks, independence issues; and financial information.”

The board urged the firms to consider “more objective measures of the
effectiveness of their systems of quality control, for example by including
detail on their key performance indicators, and their internal assessments of
performance against these KPIs in future reports”.

Further reading:
Audit
quality under pressure as firms cut costs

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