Overall, the proportion of audits assessed as requiring significant improvements or improvements was 42%, while a third of audits needed significant improvements, according to the annual audit quality inspection report.

The FRC said that one of the main reasons for the outcome of the inspections was that the firm’s audit practice had expanded too fast and did not have adequate resources in place or sufficient trained audit staff.

On technical issues, the factors which contributed most to the poor audit outcomes, were the audit of revenue, audit work on financial services entities, scepticism and challenge in key areas of judgment, and quality control and review.