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ICAEW has published its 2025 audit monitoring report, which shows an increase in the quality of work performed by registered firms over the year.
The report found that 73% of audits reviewed were rated as good or generally acceptable, an increase on the 67% recorded in 2024.
The percentage of audits requiring significant improvements fell to 6%, down from 10% in the previous year. ICAEW noted that a requirement for improvement did not necessarily mean an audit opinion was incorrect.
Quality assurance teams visited 375 firms and reviewed 667 audits in 2025. The institute targeted complex or challenging files, suggesting average audit quality across the sector may be higher than the reported figures.
Year-on-year comparisons are limited as different firms are visited each year on a rotating cycle, with the exception of the Big Four.
Common causes for lower quality included difficulties managing growth, the transition from paper to software systems, and staffing challenges. ICAEW registers approximately 1,800 firms and is the largest recognised supervisory body in the UK.
The institute introduced new audit regulations in June 2025 to enhance proactive monitoring. These rules require firms to notify the regulator of certain audit movements within 21 days of acceptance.
Professional standards head of audit, Nick Reynolds, said: “We were pleased to see a decrease in the number of audits requiring significant improvements and the increase in the proportion of audits being rated good or generally acceptable is the brightest picture since 2021.
“While we see a high standard of audit work across our registered firms, the underlying reasons for firms encountering difficulties typically fall into three main categories. These include the challenges of maintaining audit quality while pursuing a growth agenda; the adoption, implementation or integration of new technology; and attracting and retaining good audit staff.”
He added: “As an improvement regulator, we will continue to support our firms with comprehensive resources and guidance to help them build and maintain high standards.”
