UK: One in ten audits flagged for 'major improvements'

May 28, 2025

ICAEW’s latest monitoring report finds that while most audits remain of acceptable quality, 10% were flagged for significant improvements, highlighting ongoing staffing and complexity challenges.

Audit quality across the UK has held steady over the past year, but 10% of reviewed audits were found to require significant improvement, according to the Institute of Chartered Accountants in England and Wales’ (ICAEW) 2024 audit monitoring report.

The findings, based on visits to 401 firms and reviews of 790 audits, show that 67% were rated good or generally acceptable — a slight decline from 71% in 2023.

However, the ICAEW noted that year-on-year comparisons are limited, as reviewed firms vary annually and audits selected were typically more complex.

Among the Big Four, the picture was more stable: 90% of audits were deemed good or generally acceptable, with only one flagged for significant improvement.

“Though we can’t compare results year-on-year, the majority of audits we reviewed continued to remain good or generally acceptable,” said Nick Reynolds, Head of Audit, Professional Standards at ICAEW.

The 10% figure requiring significant improvement remains unchanged from last year. The ICAEW clarified that this rating does not necessarily imply the audit opinion itself was incorrect but highlights issues in quality or execution.

The report also pointed to talent as a persistent pressure point. “Larger firms tend to achieve better audit quality outcomes — in part because they’re better able to attract and retain staff with the right skills,” Reynolds said.

In response, ICAEW has committed to supporting member firms with additional resources and learning tools. A new training film, Crossing the Line, is being released as part of this effort, alongside a series of free webinars aimed at unpacking the report’s findings.

The ICAEW is the UK’s largest recognised supervisory body for audit, overseeing nearly 2,000 registered firms. Its reviews exclude public interest entity (PIE) audits, which are monitored by the Financial Reporting Council (FRC).

While the results underline a broadly stable audit environment, the consistency of the 10% figure suggests quality challenges remain — particularly in a market where talent shortages and rising complexity show little sign of easing.

[Accountancy Age]