Confidence in audit quality has unexpectedly risen despite ongoing concerns about regulatory complexity and stalled reforms, according to a new report from the Chartered Institute of Internal Auditors (CPIA). The study reveals a surge in positive sentiment from finance directors, equity investors, and audit committee chairs, even as anxieties mount over the increasing burden of compliance.
the CPIA report, released today, indicates that 53 percent of finance directors, 60 percent of equity investors, and 42 percent of audit committee chairs now cite increasing regulatory complexity as a meaningful risk to the audit profession. This reflects growing worries about overlapping obligations, especially for firms auditing public interest entities (PIEs). Though,alongside this concern,confidence in audit quality has demonstrably increased - a seemingly paradoxical finding.
The report notes a sense of “reform fatigue” following years of consultations and draft legislation, with the UK government’s proposed audit reforms yet to materialize. A Bill intended to reform the Financial Reporting Council (FRC) into a new regulator was unveiled in july 2024 as part of the King’s Speech, but has seen no further movement. This legislative standstill prompted 66 MPs and Lords to urge the Prime Minister in September to prioritize the long-delayed Audit Reform and Corporate Governance Bill.
“Proportionate reform is the best way to protect the gains we are seeing while keeping the market resilient for the UK’s largest, most economically vital companies,” stated Beale, as reported by City A.M. The CPIA has pledged to collaborate with stakeholders and policymakers to translate the report’s findings into actionable steps.
Recent enforcement actions underscore the scrutiny facing the audit profession. BDO was recently fined £6.5m by the regulator for faking audit evidence, as reported by City A.M., while Labor’s proposed £28bn wealth fund has also come under fresh scrutiny.