The audit regulator is now threatening BDO that it could take further action against the mid-tier firm under the PIE Audit Registration regulations, which gives the Financial Reporting Council (FRC) powers to ‘act decisively when it identifies systemic issues in an audit firm, impose conditions, suspensions and, in the most serious cases, remove registration’.

Audit quality at Tier 1 firm BDO failed to improve in 2023/24 with only five audits given good or limited improvement rating in the FRC’s annual AQI inspection round, which reviewed 13 audits out of the 230 in scope.

As a result, only 38% of inspected audits met the FRC’s highest rating, ‘good or limited improvements required’. Last year nine audits were given a clean bill of health, so the regulator has voiced serious concerns about how BDO is operating audit, especially after the firm has made significant investments in the audit service line.

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