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FTSE 350 impresses FRC with audit quality

There has been a gradual improvement in how FTSE 350 firms are being audited, according to assessments made by the Financial Reporting Council (FRC).

Reports revealed that more than four fifths (81%) of 2016-17 audits in the FTSE 350 needed just minor improvements – a 4% increase from the previous year, and an 11% increase from 2014-15. The FRC is targetting 90% for 2017-18.

The reviews revealed that among the reasons behind the improvements were increased use of an audit technical reviewer and Engagement Quality Control Review partner, tighter internal monitoring systems, embedded data analytics application, and better training and guidance on using specialists.

While in most cases few adjustments were needed with FTSE 350, the same was not true for every company. A higher number of small businesses were asked to make more significant improvements than was the case with larger firms. As such, the report showed no change in general audit quality.

Melanie McLaren, the FRC’s ED for Audit and Actuarial Regulation, said:

“High-quality audit underpins public trust and confidence in business. Audit firm leaderships’ focus on audit quality is a key driver of good audits and is vital to promoting a culture of continuous improvement.”

Quality of financial reporting in general has come under scrutiny in recent years, and another tax body, HMRC, has been a significant driving force behind the constant need for reevaluation. Businesses have had to call upon the services of an accountant in the Wirral more than ever, and would be wise in continuing to do so.

Posted by Mark
July 5, 2017
Research & Statistics

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