backOn December 13, 2023, the FRC published its annual inspection findings for Tier 2 and Tier 3 audit firms, which audit Public Interest Entities (PIEs). Findings reports for Tier 1, composed of the seven largest audit firms, were published separately in July of this year. Tier 2 includes firms that audit ten or more PIEs or have other risk factors, and Tier 3 firms include the remainder of firms that audit PIEs. In its 2022-2023 inspection program, the FRC inspected 13 audits at 11 Tier 2 or 3 firms. It found that 38% of audits reviewed required significant improvements. In a press release, the FRC announced that “Tier 2 and Tier 3 firms must prioritise audit quality improvements and respond swiftly.” The FRC noted that it is taking several related supervision actions, including implementing the new PIE Auditor Registration regime, which allows the FRC to impose conditions on firms with quality control issues.
The FRC’s press release can be found here, and a link to the findings report can be found here.