The Financial Reporting Council (FRC) has criticised the Big Four accounting firms for continued failings in their audit work of banks and building societies.
Audit quality continues to fall below average because of insufficient testing and challenges, the annual review said. The FRC warned that banks could be exposing themselves to bad debts because auditors have failed to challenge them on the amount of money they put aside to cover loan losses.
The watchdog inspected 10 bank and building society audits from 2013-14, but not one could be classified as ‘good'; half required some improvement and one was found to be in need of 'significant improvement'.
Paul George, FRC executive director for conduct, said...
About Robert Lovell
Business and finance journalist