The largest seven firms achieved their best performance in inspections by ICAEW’s Quality Assurance Department, with 95% of non-Public Interest Entity (PIE) audits rated as ‘good’ or ‘generally acceptable’ in the latest Audit Monitoring Report.

However, the report recorded a slight dip in the overall quality of audits reviewed in 2022/23 across all firms compared with the previous year. ICAEW said it was too early to determine whether this year’s drop in average audit quality would develop into a longer-term concern.

It encouraged firms to use their significant investment to implement ISQM quality management policies and procedures, particularly in respect of monitoring and remediation. 

More challenging elements of audits such as groups, stock, valuations and revenue were identified as critical areas for improvement. ICAEW also identified a lack of technical knowledge, flawed audit testing and inadequate reviews by managers or partners. It recommended that coaching and training at audit firms should remain an important priority.

“We were very pleased to see that 95% of non-PIE audits at the biggest firms were good or generally acceptable,” Rama Krishnan, the Chair of ICAEW’s Audit Registration Committee, says. “This is the best set of results we have seen for these firms and highlights the investments they have made. While it was disappointing to see a slight drop in the results across all firms, overall audit quality remains good. 

“ICAEW will continue to work with all of our firms to identify the key drivers where audits require improvements and encourage them to conduct root cause analysis to deliver progress.”