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The UK’s Financial Reporting Council (FRC) has released its Annual Review of Audit Quality (ARAQ) 2026, offering a market-wide assessment of audit performance.
The review is aimed at enabling better decision-making at audit firms, audit committees and other users of audit, combining inspections of audit files with evaluations of companies’ Systems of Quality Management (SoQM).
The FRC report said that SoQMs are the “foundation” of audit quality, supporting consistent audit delivery and enabling long-term improvements.
Audit quality is said to be improving overall, but the report underlines that performance remains uneven. A clear divide persists between the largest and smallest companies, particularly in the development of and investment in SoQMs.
The FRC stresses that reinforcing company-wide systems and capabilities is essential for sustained enhancements in audit quality.
The regulator links this to its revised supervisory approach, which has shifted to a risk-based and more tailored model designed to support learning and drive improvements across the system.
It is also running targeted programmes to address the root causes of inconsistency, including initiatives to build audit practice capacity and capability, and projects such as the Audit and Technology Sandbox. These are intended to support innovation, improve audit execution and strengthen companies’ systems and processes.
FRC Supervision executive director Anthony Barrett said: “Audit quality and trust in the audit sector are fundamental to well-functioning markets and confidence in the UK economy.
“Reliable audits support informed decision-making, strengthen accountability and underpin sustainable growth.
“The FRC’s report helps users of audits make better decisions and enriches conversations with audit firms by providing a balanced assessment of audit quality.
“It is encouraging that audit quality continues to improve, but it is not yet being delivered consistently across the market. Strengthening the systems within firms that underpin audit delivery is therefore critical.”
Alongside the review, the FRC has also published audit company metrics. The data is intended to help users of audit, particularly audit committees, assess how companies define and manage audit quality.
"FRC publishes ARAQ 2026, reports audit quality improving but uneven" was originally created and published by The Accountant, a GlobalData owned brand.
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