Regulator flags BDO’s ‘unacceptable’ audit issues for fifth year in a row
Accountancy giant BDO has been flagged for an “unacceptable” standard of audit quality by the watchdog for a fifth year in a row.
The Financial Reporting Council (FRC) said in its yearly audit quality report that BDO’s overall audit quality fell below expected standards and “has received unsatisfactory results from regulatory inspections” consistently for five years.
The firm was found to have performed the worst among the six largest audit firms.
According to the regulator’s findings, out of the 14 individual audits in its 2025/26 cycle, 50 per cent of the firm’s audits required improvement, with one audit needing significant improvement.
While the FRC noted minor improvements in certain areas, overall audit quality at BDO has not reached expected levels.
It now plans to increase the amount of audit inspections it conducts at BDO to directly address the issue, alongside targeted follow-up inspections on specific, individual audits to assess whether BDO has actually taken actions to address the problems.
Dominic Stammers, head of audit at BDO, said: “There is more work to do to achieve consistent high quality across all our audits.”
“We remain committed to the ongoing execution of our plan and strengthening our system of quality management to fully address the FRC’s findings,” Stammers added to City PM.
BDO issued with millions of pounds in fines
Like most of its competitors, the firm has faced a series of fines by the FRC over audit failings.
In November, the regulator slapped BDO with a £6.5m fine for faking audit evidence.
The FRC said it launched the probe into the firm after receiving formal complaints about the dishonest conduct of a senior manager between 2015 and 2019, including the creation of false audit evidence, the issuance of unapproved auditors’ reports, and the unauthorised insertion of partners’ signatures. As a result, the FRC issued BDO a severe reprimand, along with a £6.5m fine, which was reduced by 10 per cent to £5.8m. It also had to pay £716,000 for the FRC’s costs.
In May this year, the regulator hit BDO and the former head of its London audit group with a £2m fine over its work on the construction engineering firm NMCN, imposing sanctions on the firm and former partner, Geraint Jones, for significant and serious breaches during the 2019 statutory audit of the company.