From WSJ: The Financial Reporting Council found that auditors often fail to provide enough evidence to verify companies’ accounting estimates.
Audits of financial statements of Britain’s largest companies need to improve, the U.K. Financial Reporting Council said Thursday.
The country’s audit and accounting watchdog in recent months inspected 130 company audits. Most of the businesses are listed on the FTSE 350 index and largely have year-ends between July 2018 and June 2019. Forty-nine, or nearly 38%, required improvements, up from 25% in last year’s report, the FRC said.
In many instances, auditors failed to provide enough supporting evidence to assess companies’ accounting estimates and other judgments about the future. Auditors too often relied on assumptions their clients made, instead of challenging them, the FRC said.
“Despite there being examples of good auditing, auditors are still not delivering to a consistently high standard,” David Rule, the FRC’s executive director of supervision, said in a statement.