Audit Quality Concerns at BDO and Forvis Mazars: What You Need to Know

The UK’s Financial Reporting Council (FRC) has raised concerns about the declining audit quality at BDO and Forvis Mazars, two leading UK firms in the audit market. According to the FRC’s latest review, BDO’s audit quality dropped from 69% to 38% this year, while Forvis Mazars fell from 56% to 44%. This significant decline in audit standards has sparked worries about the competitiveness of these firms in the UK’s audit sector.

The FRC’s executive director of supervision expressed disappointment at the low audit quality at both BDO and Forvis Mazars, emphasizing that it falls below expectations. Given the crucial roles these firms play in the UK audit market and economic landscape, their improvement plans are deemed essential. The FRC has committed to providing ongoing supervision to help elevate their standards.

This news is significant for the market as it puts a spotlight on audit quality and competition in the industry. BDO and Forvis Mazars are key players challenging the dominance of the ‘Big Four’ accounting firms – EY, KPMG, Deloitte, and PwC. With the ‘Big Four’ showing higher audit quality percentages, there is pressure on BDO and Forvis Mazars to enhance their standards to remain competitive.

The decline in audit quality at these firms has broader implications for market competition and corporate governance. High-quality audits are crucial for transparency, investor confidence, and economic stability. The FRC’s findings underscore the importance of continuous improvement and strict supervision to ensure all audit firms, not just the ‘Big Four’, can deliver reliable and high-standard audit services across the board. Investors, policymakers, and market participants are closely monitoring the situation to ensure a more competitive audit environment that benefits all stakeholders.