Report on Developments in Audit
Published: 2 October 2023
2 minute read
The Developments in Audit report was first produced in 2015/16 and was the first of its kind for the FRC as the UK’s Competent Authority for audit.
The Developments in Audit report was first produced in 2015/16 and was the first of its kind for the FRC as the UK’s Competent Authority for audit.
The overview report focused on assessing justifiable confidence in UK audit and also summarises the current ‘state of play’ as seen by the FRC and its stakeholders. It is supplemented by a more detailed report of the FRC’s audit related activities and evidence gathering.
The FRC believes there is a justifiably higher level of confidence in audit as a result of changes to independence requirements and the promotion of quality as a driver for competition in the audit market. However, it also notes some remaining concerns around confidence.
We have also commissioned a second YouGov survey to benchmark confidence in audit in the UK. This indicates that stakeholders have a clearer understanding of what audit is and a higher level of confidence in it. But recent corporate failures and the resulting increased public scrutiny of auditors, have undermined some of this progress.
The FRC’s report on the current state of audit identified these key influences on confidence:
- Audit firms are seen as more independent and competing for audit engagements on quality grounds, but concern remains that the FTSE 350 audit market is concentrated across the Big Four firms, as the smaller firms are thought to struggle to match on skill level, resource and ability to bear the cost of tendering processes.
- EU regulatory changes have also bolstered confidence, with the introduction of mandatory rotation and the tightening of rules around non-audit service provision. However, some fear the increased public and regulatory scrutiny could deter future talent from joining the profession, thus impacting long-term quality.
- The FRC’s audit monitoring results and those of the professional bodies show audit quality in the UK is improving. In 2015/16 the FRC assessed 77% of FTSE 350 audits it reviewed as requiring no more than limited improvements. The FRC considers that at least 90% of FTSE 350 audits should fall into that category by the end of its 2016/19 strategy.
- The large firms are beginning to improve the effectiveness and efficiency of audit through the transformative use of technology, which should prompt further competition on quality. This raises further concerns about smaller firms’ ability to compete, what the role is for the auditor and how regulators and standard setters will be able to keep up.
| Name | Developments in Audit 2021 |
|---|---|
| Publication date | 18 November 2021 |
| Type | Report |
| Format | PDF, 7.5 MB |
| Name | Developments in Audit 2020 |
| Publication date | 12 November 2020 |
| Type | Report |
| Format | PDF, 1.2 MB |
| Name | Developments in Audit 2019 |
| Publication date | 4 November 2019 |
| Type | Annual report |
| Format | PDF, 987.8 KB |
| Name | Developments in Audit 2018 |
| Publication date | 8 October 2018 |
| Type | Report |
| Format | PDF, 2.0 MB |
| Name | Developments in Audit 2016/17 - Full report |
| Publication date | 28 July 2017 |
| Type | Report |
| Format | PDF, 1.5 MB |
| Name | Developments in Audit 2016/17 - Summary report |
| Publication date | 28 July 2017 |
| Type | Report |
| Format | PDF, 299.3 KB |
| Name | Developments in Audit – February 2017 update |
| Publication date | 14 February 2017 |
| Type | Annual report |
| Format | PDF, 1.1 MB |
| Name | Developments in Audit 2015/16 - Full report |
| Publication date | 14 July 2016 |
| Type | Report |
| Format | PDF, 2.5 MB |
| Name | Developments in Audit 2015/16 - Overview |
| Publication date | 14 July 2016 |
| Type | Report |
| Format | PDF, 1.2 MB |
| Name | Audit Quality Inspections Annual Report 2014/15 |
| Publication date | 29 May 2015 |
| Type | Annual report |
| Notes | From 2016 the Development in Audit report replaced the Audit Quality Inspections Annual Report |
| Format | PDF, 304.4 KB |
| Name | Audit Quality Inspections Annual Report 2013/14 |
| Publication date | 28 May 2014 |
| Type | Report |
| Notes | From 2016 the Development in Audit report replaced the Audit Quality Inspections Annual Report |
| Format | PDF, 1.3 MB |
| Name | Audit Quality Inspections Annual Report 2012/13 |
| Publication date | 29 May 2013 |
| Type | Annual report |
| Notes | From 2016 the Development in Audit report replaced the Audit Quality Inspections Annual Report |
| Format | PDF, 745.2 KB |
| Name | Audit Quality Inspections Annual Report 2011/12 |
| Publication date | 14 June 2012 |
| Type | Report |
| Notes | From 2016 the Development in Audit report replaced the Audit Quality Inspections Annual Report |
| Format | PDF, 2.4 MB |