Who audits the auditors?

The Financial Reporting Council (FRC) has just published its audit quality inspection reports for the 6 largest auditing companies in the UK. The job of the FRC’s Audit Quality Review (AQR) team is to monitor the quality of the audit work of those UK audit firms that audit public interest and large entities.

The AQR team have been busy over the last year and have now released lengthy reports for BDO, Deloitte, EY, Grant Thornton, KPMG and PwC.

Overall, the quality of the audits has improved during the last year with the number of audits that required “significant improvements” dropping from 10 to 2 for the Big 4. There were no audits that required significant improvements at BDO or Grant Thornton.

Unfortunately for KPMG though, they were the company that undertook the two audits that were highlighted by the FRC as needing significant improvements.

The FRC reviewed 22 KPMG audits and out of those there were 2 that required significant improvements.

The first one involved a change of systems and a 3rd party IT provider. The FRC identified that the KPMG audit team did not “design and perform procedures to obtain sufficient audit evidence in response to the migration risk”.

In the second audit where there were problems the FRC highlighted that insufficient audit work had been performed in relation to revenue and inventory.

Details of the scope of the reviews can be found here and are the full reports on the individual companies are on the following links:

BDO
Deloitte
EY
Grant Thornton
KPMG
PwC

Will auditors become more like Tom Cruise in the future?

Gone are the days when auditors were manually checking and ticking lots of pieces of paper. Today’s auditing techniques involve significant use of computers. But[..]

Naked accountants...

Is this you? At a young age you decided that a career in finance was what you wanted. Whilst the other kids were running around[..]

Should Ernst & Young have done this?

I think truth and honesty in business are vital. I can therefore say in all truthfulness and honesty that I think Ernst & Young is[..]

I'll stick to that...

New product innovation is vital for lots of organisations. Sometimes though the idea for a new product can come from unusual places. VELCRO is a[..]

Out of this world advertising...

Getting professional photos taken for advertising can be expensive but this particular photo shoot for Estee Lauder is expensive. Very expensive in fact. 4 hours[..]

An Apple for 100 Companies..

Whilst a lot of companies around the world are struggling or going out of business due to the Covid-19 pandemic, some are doing very well.[..]

Cows vs. oats

Things are changing in the milk business. Or rather, I should say things are changing in the dairy milk and vegan milk business. Over the[..]

Big Mac with 4 sides

We blogged last year about the former boss of McDonald’s being fired due to a relationship with a colleague but it turns out, there may[..]

Rocking along nicely...

Years ago, advertising largely used to be based around TV, radio, magazines and newspapers. Then the Internet came along and changed things dramatically. One of[..]