UK Watchdog Slams ‘Unacceptable’ Audit Quality at Smaller Firms

The UK’s accounting watchdog Wednesday said smaller firms’ audit quality was “unacceptable” and showed a lack of professional skepticism.

The Financial Reporting Council released the results of its annual review of audits by firms outside of the seven biggest, known as Tier 2 and Tier 3 firms. It concentrated on audits of public interest entities, largely FTSE 350 companies, and large local government organizations.

“It is important that all firms step up to improve the overall health and resilience of the audit market,” Sarah Rapson, the FRC’s executive director of supervision, said in a statement.

The ...