Fewer audits need ‘significant’ improvement, ICAEW report finds

ICAEW professional standards department’s (PSD) has found that just 4% of audits required significant improvement this year, down from 7% in 2020-2021, according to its audit monitoring report of non-PIE auditors and non-PIE audit work, for the year ending 31 March 2022.

ICAEW monitors the work of firms of all sizes, from sole practitioners to the Big Four – in total about 2,400 firms – and reports on its findings annually. Most visits conclude without the need for further regulatory action.

PSD completed 555 audit monitoring review visits, incorporating the review of firms’ work on 1,056 audits, between April 2021 and March 2022.

At 76%, the percentage of audits found to be good or generally acceptable remained the same, reflecting continuity in audit quality standards from 2020-2021.

Rama Krishnan, chair of ICAEW’s audit registration committee, said: “Since September 2021 most audit monitoring visits have once again been conducted onsite, which has been a key factor in the effectiveness and efficiency of PSD’s monitoring work.

“We’re pleased that our annual review has found a sharp drop in the percentage of audits requiring significant improvement. If this trend is sustained by firms reviewed in 2022-2023 and beyond this is a very positive development. But work remains on audit quality standards, which need to be improved, and the profession must focus on increasing these in the year ahead.”