UK Watchdog Says Private Equity Poised to Help Audit Quality

Private equity investment holds promise to strengthen audit quality, with appropriate safeguards in place to guard against risks to auditor independence, a UK watchdog said Thursday.

Outside investment in accounting firms is set to help both audit quality and innovation when properly structured, the Financial Reporting Council said in a statement. Firms “must ensure any ownership changes protect both the public interest and independence,” FRC said.

The statement comes amid a wave of PE investment into audit firms globally. Cinven bought a stake in top-10 UK firm Grant Thornton late last year, for example.

• Thursday’s statement about potential benefits of ...