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The ICAEW has revealed its quality assurance team visited 401 firms and reviewed work on 790 audits in the year and found 67% of those audits were rated as either good or generally acceptable.
The work is selected as those likely to be the firms’ most complex or challenging audits and while this was a decrease on 2023 ratings (71%), the average audit quality is likely to be higher given the targeted file selection.
The percentage of audits requiring significant improvements remained relatively steady at 10%.
The ICAEW also said that audit quality cannot be directly compared year-on-year because – except for the Big Four firms – as different audit firms are visited each year as they are reviewed on longer cycles.
Among the Big Four, 90% of audits were good or generally acceptable, and only one audit required significant improvement.
The ICAEW also added that where audits were found to require significant improvement, “this did not necessarily mean the audit opinion was incorrect”.
Nick Reynolds, ICAEW Professional Standards head of Audit, said: “Though we can’t compare results year-on-year, the majority of audits we reviewed continued to remain good or generally acceptable. Our reviewers select the most complex files so overall, audit quality is likely to be higher.
“Although we see a lot of good audit work across our wide range of registered firms, we know that some continue to struggle due to a variety of factors including inability to attract and retain good audit staff. Larger firms fare better in the recruitment market, with stronger overall audit quality results. We’ll continue to support our firms to help them build and maintain high standards, including with the release of our latest training film, Crossing the Line.”
The report also highlights the efforts made by firms to enhance their quality management procedures in line with ISQM 1 requirements. Many firms have invested considerable time and resources in the implementation of a quality management system over the past three years, ICAEW said.
ICAEW registers about 2,000 firms to conduct audit work. It plays a significant role in monitoring the quality of non-Public Interest Entity (PIE) audit work and is the largest recognised supervisory body in the UK.
