Audit quality at smaller UK companies is concerning, flatlining in industry.

TLDR:

Quality of audits on smaller UK companies remained steady over the past year at 71% deemed good or generally acceptable. The lack of improvement was blamed on smaller firms taking on more complex audits of corporate financial statements.

According to a report issued by the Institute of Chartered Accountants in England and Wales, audit quality for smaller, more lightly regulated UK companies did not see any improvement over the past year. The report, covering the period of 2023-2024, found that 71% of audits were deemed good or generally acceptable, the same as the previous year. This lack of improvement was described as “slightly disappointing” by the institute.

The institute attributed the failure to improve audit quality to smaller firms taking on more complicated audits of corporate financial statements. This trend of smaller firms handling more complex audits may have contributed to the flatlining of audit quality in the industry.

As the regulatory environment for smaller companies in the UK continues to evolve, it will be crucial for accounting professionals and auditing firms to address the challenges highlighted in this report to ensure the quality and reliability of audits for these businesses.