The Financial Reporting Council (FRC) said that all audit firms needed to ensure that they provided engagement teams with sufficient guidance and training to support their use of professional judgment.

Most firms’ methodologies are based on similar statistical models with firms building on these with their own guidance and preferences. This has led to substantial variation in the firms’ final methodologies, warned the FRC in the latest thematic review of audit sampling.

Sampling has been identified as an area of repeated weakness when FRC inspectors conduct the annual audit quality reviews (AQR), particularly at smaller audit firms.