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UK FRC concerned over Grant Thornton UK audits

Five out of the eight inspected Grant Thornton UK audits found to require improvements or significant improvements by the UK Financial Reporting Council (FRC).

The UK FRC published its audit quality inspection report for Grant Thornton UK and revealed that out of the eight audits it reviewed, three were performed to a good standard with limited improvements required, two audits required improvements and three required significant improvements.

Of the latter group the FRC said these audits needed significant improvements in one or more of the following area: "Insufficient involvement in and supervision, direction and control of group audits; lack of management challenge or professional scepticism in a number of areas of judgment or estimate; and insufficient evidence of appropriate reporting to audit committees."

One of the eight audit reviewed was a further assessment of an audit reviewed in the FRC's last inspection, the UK watchdog pointed out, and for a second year in a row this particular was found to require significant improvements.

"This assessment does not necessarily imply that an inappropriate audit opinion was issued," the FRC report read. An audit is assessed as requiring significant improvements if the FRC has concerns "in relation to the sufficiency or quality of audit evidence or the appropriateness of significant audit judgments in the areas reviewed or the implications of other matters are considered to be individually or collectively significant".

Grant Thornton UK said in a statement: "We are of course disappointed that more of our progress is not yet evident, however we appreciate the insights provided by the review team, and we have been making good progress around enhanced policies and procedures designed to address areas of weakness."

The FRC also published the results of its audit quality review of Crowe Clark Whitehill, a Crowe Howarth International member firm. Of the five audits it inspected, four were performed to a good standard with limited improvements required and one audit required improvements.

In mid-June, the FRC will published the results of its audit quality review of Deloitte, KPMG, EY, PwC and Mazars which will conclude the FRC's reporting on the 2014/15 cycle of audit inspections.

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