The majority of non-PIE audits undertaken by ICAEW-registered audit firms were delivered to a “good standard”, according to the ICAEW regulatory board’s annual audit monitoring report.
It comes as the board reports annually on the findings of ICAEW’s quality assurance inspections.
In 2019, ICAEW reviewed 960 audit files across a range of firms, with the majority achieving the expected standards, with good practice in many areas. These visits concluded without any follow-up action, according to the board.
Nonetheless, 18% of audits required improvements and 8% needed “significant” improvement, though this “did not necessarily mean that the audit opinion was incorrect, or financial statements were misstated”.
According to ICAEW, audits typically needed to improve due to lacking “sufficient evidence”, reaching inappropriate decisions in key areas, failing to challenge management, or lacking adequate documentation.
The group added that “robust action plans” were agreed with firms that needed to improve, and progress was monitored.
Michael Caplan QC, chair of ICAEW’s Regulatory Board, said: “Trust in the quality of audit underpins confidence in UK business. In the current economic climate this has never been more important.
“The report shows there is good practice among most audit firms, but it is concerning that around a quarter of audit files reviewed did not meet the high standards ICAEW expects, as the largest audit supervisory body in the country. ICAEW is committed to supporting its regulated firms in achieving a better quality of audit.”