FRC publishes report on audit inspections at UK's largest firms

Glad to see the FRC’s AQR key findings and good practice report now published. It offers valuable insights from inspections of the UK’s largest audit firms, helping drive improvements in audit quality and informing key stakeholders. #AuditQuality #FRC #AQR #Governance #FinancialReporting

The FRC has recently launched a new supervisory approach for smaller firms. This new initiative is designed to support growth, raise audit quality and build the capabilities of firms across the audit market. Explore the details in our one page explainer: https://ow.ly/tkhl50X1jg6 #audit

FRC’s Audit Review: Why It’s a Big Deal for Mid-Market Businesses 👇 Audit quality is under the microscope – but what does that mean for you? 🔍 The Financial Reporting Council's latest Annual Review of Audit Quality told us some firms are showing signs of improvement, while others are still falling short. For mid-market businesses, this isn’t just a headline. It’s a wake-up call. Auditors covering the UK Public Interest Entity (PIE) market are facing increasing scrutiny on their procedures more than ever. In some instances, this might mean more fees, longer timelines, and less service capacity for their mid-market clients, and if your auditor is under pressure to direct more time and resources to their PIE clients, you might be feeling the ripple effects already – or you soon will. At Cooper Parry, we don’t audit PIEs. Instead, we’ve built our reputation on quality, focused, risk-based audits specifically for mid-market businesses. So, if you’re planning to review your auditor in advance of your year-end, now could be an opportune moment for us to have a chat. #Audit #AuditQuality #FRC #MidMarketBusiness #CooperParry

Auditor independence is the backbone of trust in financial reporting. Without it, even the most thorough audit loses credibility. ➡️ Objectivity – Independence ensures the auditor’s judgment isn’t influenced by management. ➡️ Investor Confidence – Markets rely on unbiased opinions to make informed decisions. ➡️ Regulatory Compliance – PCAOB standards strictly prohibit conflicts of interest to maintain audit quality. ➡️ Long-Term Value – Independent audits strengthen governance and transparency. 📌 Companies must respect independence boundaries — such as avoiding prohibited non-audit services — to safeguard audit integrity. Tomorrow, we’ll cover: ➡️ “PCAOB Inspections – What Companies Should Know” #PCAOB #Audit #ICFR #Independence #Governance

🚀 New Project: Exploring Audit Scams As part of my recent academic project, I’ve been analysing major audit scandals to understand how audit lapses impact investor trust and corporate governance. One of the most striking cases I came across is the London Capital & Finance (LC&F) scandal of 2024, which revealed how even top audit firms can falter when skepticism and diligence fall short. 💼 Audit Lessons from the LC&F Scandal (2024) In 2024, the UK’s Financial Reporting Council (FRC) imposed heavy fines on PwC (£4.9 million) and EY (£4.4 million) for serious audit failures in the case of London Capital & Finance (LC&F) — a firm that collapsed, leaving over 11,000 investors with losses exceeding £237 million. LC&F sold mini-bonds — unregulated financial products marketed to ordinary investors. Despite clear warning signs, auditors issued clean audit opinions, creating a false sense of confidence. When the company collapsed, it became evident that the auditors had failed to understand the business model, assess risk properly, and question management claims. What went wrong: 1.Limited understanding of the company’s high-risk, unregulated operations. 2.Weak risk assessment and inadequate follow-up on red flags. 3.Overreliance on management’s information with low professional skepticism. 4.Internal quality control lapses within audit firms. Consequences: The FRC’s findings damaged trust in Big Four audit reliability, leading to tighter regulatory scrutiny and public criticism of audit complacency. Key Takeaways: ✅ Go beyond numbers — understand the business deeply. ✅ Maintain professional skepticism at every step. ✅ Use specialized expertise for complex financial products. ✅ Ensure transparency when risk exposure is high. The LC&F case is a reminder that auditing is not just a technical exercise — it’s a responsibility to protect public trust and financial integrity.A special mention to Deepa Raja for fostering my interest in auditing . #Audit #CorporateGovernance #FinancialEthics #RiskManagement #PwC #EY #LCFScandal #AuditFailures #assignment #bcompa #commerce #college #modulea #challenges

What is an Audit Transparency Report? (FRC Rule 12) 🔎 Building Trust Through Audit Transparency An Audit Transparency Report, as defined in FRC Rule 12, is a detailed public document showcasing a firm’s: * Legal structure & ownership * Governance framework * Internal quality control systems * Education & independence practices * Firm revenue and partner remuneration * List of *PIE (Public Interest Entities) and non-PIE audit clients 📌 Scenario: A top-tier audit firm seeking international recognition publishes its annual Transparency Report. Potential global clients use it to assess the firm’s governance and independence practices before awarding major contracts. 👉 Lesson: Transparency reports aren’t just regulatory paperwork—they are credibility boosters and a competitive edge in the professional services market. Website: https://lnkd.in/enJNzhB7 Email: info@omatotalconsult.com #AuditTransparency #CorporateGovernance #FRCN #TrustAndAccountability #FinancialServices #AuditQuality

Single, shared or joint audit? It’s time to rethink your audit strategy. Put simply: in a single audit, one firm performs the statutory audit. In a shared audit, one firm leads while a second audits defined components. In a joint audit, two independent firms work together and issue one opinion. 📈 The evidence is clear. In France, where joint audits are mandatory, the audit fee to revenue ratio is 0.046%, lower than in countries such as Sweden, Spain and the Netherlands where single audits dominate. More eyes do not mean more cost. They bring broader expertise, reduce reliance on a single firm and strengthen risk coverage. The model also diversifies the market. France is the only major EU market where the Big Four hold under 80% market share, which expands choice, increases competition and improves service quality. More competition and structured collaboration tend to raise client satisfaction, transparency and trust. The takeaway for Switzerland is straightforward. If you still rely on a single audit model, consider whether a shared or joint audit would deliver greater efficiency, quality and resilience without increasing your budget. Other countries, such as the UK and Germany, are increasingly taking advantage of shared audits, especially in the middle market and among large corporations. 𝗗𝗼 𝘆𝗼𝘂 𝘄𝗮𝗻𝘁 𝘁𝗼 𝗸𝗻𝗼𝘄 𝗺𝗼𝗿𝗲 𝗮𝗯𝗼𝘂𝘁 𝗵𝗼𝘄 𝘆𝗼𝘂𝗿 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 𝗰𝗮𝗻 𝗯𝗲𝗻𝗲𝗳𝗶𝘁? This perspective is based on the 2025 Forvis Mazars Group study on EU audit fees and market structure: https://lnkd.in/d6XszhYz #Audit #CFO #CorporateGovernance #RiskManagement #AuditInnovation

Effective internal audit relies on strong board support. BDO highlights essential questions every board should consider to help strengthen their oversight. https://bdousa.com/4n8KX4F

When Oversight Works: Boards, Audit Committees, and Auditors Strong governance relies on the quality of interaction between the Board of Directors, the audit committee, and the auditors. In practice, internal audit is supervised by the audit committee, ensuring independence from management and structured reporting to the board. External auditors present their conclusions to the audit committee for discussion, and then report directly to the board, typically in the sessions where financial statements are reviewed and approved. This dual interaction helps ensure transparency, informed dialogue, and independent oversight. Across organizations, I see different practices: some audit committees invite external auditors to attend most meetings, while others involve them mainly at key moments. In some companies, the CEO joins the audit committee meeting; in others, discussions are kept between committee members and auditors, with time reserved for private sessions. Both models exist, each shaped by the governance culture of the company. What matters most is that communication remains open, structured, and reliable, so boards can make confident decisions supported by independent assurance. #Governance #Audit #Assurance #BoardOfDirectors #RiskManagement

👋 End of Day Recap: Internal vs. External Audit 👋 Wrapping up today's review of today's lesson with a simple breakdown of the two types of auditors we talk about: 1. Internal Audit: Works for the company. Goal is to help management fix stuff and improve controls. 2. External Audit: Independent CPA firm. Goal is to give an objective opinion to outsiders (investors, customers, etc). I'm pivoting to be that objective, independent voice! If you're in compliance, which type of auditor do you find yourself working with more often, and why? 🧐 Let me know below! 👇 #InternalAudit #ExternalAudit #GRC #AuditLife #Networking