71% of audits deemed ‘good’ in 2024, ICAEW finds

A total of 71% of audits in 2023/24 were deemed good or generally acceptable, ICAEW has revealed. 

The latest audit monitoring report showed a strong performance by the larger audit firms with 88% of non-Public Interest Entity (PIE) audits carried out by larger firms considered good or generally acceptable. 

Outside of the larger firms, most firms reviewed this year were different to those reviewed last year due to most firms being on a six-year review cycle, which makes year on year comparisons very difficult. 

The results were based on nearly 500 audit monitoring visits carried out by ICAEW’s Quality Assurance Department in 2023/24. Reviewers were asked to select the audits considered to be the most complex and challenging so the overall result is not necessarily representative of average audit quality, which is likely to be higher. 

Rama Krishnan, chair of ICAEW’s Audit Registration Committee, said: “While there has been no deterioration in the overall result this year, it is slightly disappointing that overall performance has not improved. However, we recognise that different firms are reviewed each year which makes it difficult to make year on year comparisons.

“There are indications that audit quality is being challenged by changing market conditions with an unprecedented movement of complex audits from larger to smaller firms which is requiring those smaller firms to move quickly to upscale their risk and quality processes. Greater visibility of this movement is important so that the Institute can check proactively that firms have the right expertise and experience to take on new larger audits.”

Krishnan concluded: “That is why the Committee fully supports the proposal by the ICAEW Regulatory Board to change the Audit Regulations to require firms to report the acceptance of new audits falling within certain criteria.”