A key part of our role as an improvement regulator is to provide help and support to our firms, ensuring they have the tools and resources available to help them maintain the standards expected to strengthen trust in the profession. Access our latest Audit Monitoring Report, a valuable resource for firms regulated by ICAEW for audit services.
The 2023/24 Audit Monitoring Report reflects on the reviews undertaken by ICAEW’s Quality Assurance Department (QAD). The department carried out nearly 500 audit monitoring visits in 2023/24, with 761 audits reviewed.
In the report, 71% of audits were deemed good or generally acceptable, the same as in 2022/23. Larger firms performed particularly well with 88% of non-Public Interest Entity (PIE) audits reviewed considered good or generally acceptable.
Audit monitoring visits in 2023/24
Our reviewers for 2023/24 reported that audit quality continues to be affected by changing market conditions, such as the movement of complex audits from larger firms to smaller ones that needed to upscale their systems accordingly.
Interestingly, consolidation in the market has created new audit teams at some firms that have required time to implement whole-firm procedures. Benefits to this are that in time, these firms could reach a size where they would create dedicated risk and quality teams, as well as a greater investment in training.
Rama Krishnan, Chair of ICAEW’s Audit Registration Committee (ARC), said:
“While there has been no deterioration in the overall result this year, it is slightly disappointing that overall performance has not improved. However, we recognise that different firms are reviewed each year which makes it difficult to make year-on-year comparisons.
“There are indications that audit quality is being challenged by changing market conditions with an unprecedented movement of complex audits from larger to smaller firms which is requiring those smaller firms to move quickly to upscale their risk and quality processes. Greater visibility of this movement is important so that the Institute can check proactively that firms have the right expertise and experience to take on new larger audits.
“That is why the Committee fully supports the proposal by the ICAEW Regulatory Board to change the Audit Regulations to require firms to report the acceptance of new audits falling within certain criteria."
Monitoring visits in 2023/24 included assessment of the implementation of ISQM1, the international quality management standard introduced in December 2022. Reviewers from QAD shared that the implementation had been positive and it would continue its monitoring of the standard.
The findings from the report come following ICAEW’s consultation, Audit Regulations consultation: notification of movement of audits. In it, ICAEW proposed to its stakeholders to change audit regulations to increase the visibility of audits moving between firms to help monitor risk. A further update on the results of that consultation will be published in due course on ICAEW’s regulatory consultations’ webpage.
ICAEW as an improvement regulator
ICAEW plays a significant role monitoring the quality of non-public interest entity (PIE) audit work in the UK. As the largest recognised supervisory body for statutory audit in the UK, with more than 2,000 audit firms registered, ICAEW’s responsibilities are delegated by the Financial Reporting Council (FRC) and the UK Competent Authority.
Our philosophy is to be a robust, proportionate, and transparent regulator. At the same time, as an improvement regulator, we offer help and support to our firms where appropriate.
We are pleased to see the overall percentage of audits that are graded good or generally acceptable has remained steady.
Useful links
Read the report
Read how firms can improve the quality of their audit work based on the findings of our Quality Assurance reviews.
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