FRC publishes ARAQ 2026, reports audit quality improving but uneven

The UK's Financial Reporting Council (FRC) has released its Annual Review of Audit Quality (ARAQ) 2026, offering a market-wide appraisal of audit performance.

The reappraisal is aimed astatine enabling amended decision-making astatine audit firms, audit committees and different users of audit, combining inspections of audit files with evaluations of companies' Systems of Quality Management (SoQM).

The FRC study said that SoQMs are the "foundation" of audit quality, supporting accordant audit transportation and enabling semipermanent improvements.

Audit prime is said to beryllium improving overall, but the study underlines that show remains uneven. A wide disagreement persists betwixt the largest and smallest companies, peculiarly successful the improvement of and concern successful SoQMs.

The FRC stresses that reinforcing company-wide systems and capabilities is indispensable for sustained enhancements successful audit quality.

The regulator links this to its revised supervisory approach, which has shifted to a risk-based and much tailored exemplary designed to enactment learning and thrust improvements crossed the system.

It is besides moving targeted programmes to code the basal causes of inconsistency, including initiatives to physique audit signifier capableness and capability, and projects specified arsenic the Audit and Technology Sandbox. These are intended to enactment innovation, amended audit execution and fortify companies' systems and processes.

FRC Supervision enforcement manager Anthony Barrett said: "Audit prime and spot successful the audit assemblage are cardinal to well-functioning markets and assurance successful the UK economy.

"Reliable audits enactment informed decision-making, fortify accountability and underpin sustainable growth.

"The FRC's study helps users of audits marque amended decisions and enriches conversations with audit firms by providing a balanced appraisal of audit quality.

"It is encouraging that audit prime continues to improve, but it is not yet being delivered consistently crossed the market. Strengthening the systems wrong firms that underpin audit transportation is truthful critical."

Alongside the review, the FRC has besides published audit institution metrics. The information is intended to assistance users of audit, peculiarly audit committees, measure however companies specify and negociate audit quality.

"FRC publishes ARAQ 2026, reports audit prime improving but uneven" was primitively created and published by The Accountant, a GlobalData owned brand.