In 2018, the FRC reported a decline in audit inspection results across the Big Four audit practices in the UK. The FRC warned that ‘the Big Four audit practices must act swiftly to reverse the decline in this year’s audit inspection results if they are to achieve the targets for audit quality set by the Financial Reporting Council

(FRC) . . . Across the Big 4, the fall in quality is due to a number of factors, including a failure to challenge management and show appropriate scepticism across their audits, [and] poorer results for audits of banks.’ Stephen Haddrill (FRC chief executive) added that ‘firms must strenuously renew their efforts to improve audit quality to meet the legitimate expectation of investors and other stakeholders.’.

Required:
Discuss the situation of the Big Four as described above. You may want to review the Audit Quality Inspection reports of the Big Four, as published by the FRC, available at: www.frc.org.uk/auditors/
audit-quality-review/audit-firm-specific-reports.