Accounting Firms

EY ‘makes progress but needs improvements’ after audit review

The areas of the audit which contributed most to this were revenue, group audits, and cash

The FRC has assessed that 35% of the audits it inspected from EY as requiring improvements, an increase from 21% the previous year, despite saying the firm ‘made progress” on actions to address its previous findings.

The areas of the audit which contributed most to this were revenue, group audits, and cash, none of which were areas where it had key findings last year. Most of these findings arose in non-FTSE 350 audits, with 22% of the FTSE 350 audits we reviewed requiring
Improvements.

At the same time, it also said it identified a range of good practice in these and other
Areas, and none of the audits inspected were found to require significant improvements.

While the FRC did not identify any systemic reasons for its inspection results, it noted in particular that the firm’s Root Cause Analysis (RCA) “identifies the need for more effective coaching from senior levels which has been an operationally challenging aspect of remote working”.

It said it would take the following action; require the firm to reconsider its previous RCA findings and actions to improve audit quality, and require all actions to be included in a Single Quality Plan (SQP), subject to formal reporting and regular review by the FRC.

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