A summary of FRC's latest AQI reports includes, audit firms hauled over revenue recognition and ethical standards, third of KPMG audits flagged for improvement, EY rapped over audit completion process, Grant Thornton told to improve internal controls
FRC hauls up audit firms over revenue recognition and ethical standards
The quality of audit reporting over the last 12 months has improved ‘slightly’ with four out of five audits achieving a grading of ‘good’ (A) or ‘limited improvements’ (2A) required, according to the Financial Reporting Council’s (FRC) latest round of audit quality inspection reports for 2016/17, despite serious problems with reporting of revenue recognition, asset impairment, compliance with ethical standards and a lack of dialogue with audit committees.
The inspectors assessed 106 audits at six firms – the Big Four, Grant Thornton and BDO – and found that nearly a quarter (23%) audits fell below standard, with eight flagged as requiring ‘significant improvements’ and 16 ‘improvements’.
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