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The Financial Reporting Council (FRC) has issued a consultation on publishing audit quality indicators (AQIs) for the largest UK audit firms, which would provide users of audited information with greater detail on audit firms’ efforts to deliver high quality audit.
The FRC said the 11 proposed AQIs would provide stakeholders with a range of comparable indicators on perceived culture within an audit firm, audit quality inspection results, staff workloads, and the level of partners’ involvement in individual audits.
It comes as there is currently limited available information that compares audit quality between the firms. Therefore, setting out AQIs to enable discussions between Audit Committee Chairs (ACCs) and audit firms on the drivers of audit quality will reportedly help ACCs to make more informed comparisons between firms when appointing external auditors.
This increased emphasis on quality by users will further increase audit firms’ focus on driving further improvements in the key area of audit quality, according to the FRC.
The FRC’s executive director of Supervision Sarah Rapson said: “Stakeholders have been clear there is a need for concise and comparable audit quality indicators to improve transparency and drive audit quality improvements.
“Greater transparency and comparability will further help to shine a light on firms’ efforts to deliver high quality audit. We welcome stakeholders’ further views on what indicators will most assist in driving the audit quality conversation between users and the firms.”
