Anthony Barrett

The report highlights the importance of firms’ Systems of Quality Management (SoQMs), which the regulator describes as the foundation for delivering consistent, high-quality audits. However, it found the largest firms continue to outperform smaller firms, reflecting differences in investment, governance and audit infrastructure.

The FRC said strengthening firm-wide quality management systems will be key to delivering sustained improvements in audit quality and maintaining confidence in UK capital markets.

As part of its revised supervisory approach, the regulator has adopted a more risk-based and tailored model of oversight designed to encourage learning and continuous improvement. It is also investing in initiatives aimed at strengthening firms’ capabilities, including the Audit and Technology Sandbox, which supports innovation and the adoption of new technologies in audit.

Anthony Barrett, executive director of supervision at the FRC, said: “Audit quality and trust in the audit sector are fundamental to well-functioning markets and confidence in the UK economy. Reliable audits support informed decision-making, strengthen accountability and underpin sustainable growth. The FRC’s report helps users of audits make better decisions and enriches conversations with audit firms by providing a balanced assessment of audit quality.

“It is encouraging that audit quality continues to improve, but it is not yet being delivered consistently across the market. Strengthening the systems within firms that underpin audit delivery is therefore critical. Well-designed and effectively operating systems of quality management create the conditions for high-quality audit to be delivered consistently over time.

“There is no one-size-fits-all approach to delivering audit quality. Firms differ in their structure, strategy and risk profile; what matters is that each firm’s systems can deliver quality outcomes reliably. Our supervisory, investigatory, and enforcement activities deliver improvements in audit quality which support the UK as a great place to raise capital and to do business. We recognise that there is more work to be done in improving audit quality and are committed to a regulatory approach that underpins a thriving and resilient audit market.”

Alongside the review, the regulator has also published its latest Audit Firm Metrics, intended to help audit committees and other users better understand how firms measure and manage audit quality. The FRC stressed that the metrics are not designed to rank firms, but to support more informed discussions between audit firms and their clients.

The full Annual Review of Audit Quality 2026 is available here.