The new head of the UK’s Financial Conduct Authority (FCA) has sounded a warning regarding inadequate reporting on assets by some audit firms. The performance of audit firms has come under scrutiny by the FCA and there is a call to improve audit quality drastically.
FCA head, Charles Randell was delivering an address the day before the anniversary of the global crash we saw 10 years ago that had been sparked by the downfall of two major mortgage lenders in the US. This was compounded by the bankruptcy of Lehman Brothers that ensued a short time afterward.
In an article by author, Pat Sweet on accountancydaily, Randell says, the ‘audited financial statements of a financial firm are the cornerstone on which the additional regulatory processes are built’.
According to Randell, the Financial Reporting Council’s (FRC) 2017/18 Audit Quality Review is therefore extremely disappointing as it highlights a decline in the quality of audits on the part of the Big Four. It also highlights a decline in the quality of audits specifically at banks.
In the article, Randell calls for the accounting profession ‘to step up its game’.