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In spite of a rise in the number of “good” audits, the watchdog complained that many of the problems it had identified in previous years had recurred.
Some professional services companies were still failing to do enough to ensure their independence, the FRC said, for example by undertaking other work such as consulting for the companies whose books they were scrutinising.
It also issued a fresh warning about a squeeze on audit fees. Audit firms were exposing shareholders to the risk of low quality book vetting by “offshoring” chunks of their procedures to low-cost economies such as India, the FRC said.
Meanwhile, the FRC also said further improvements were required in the auditing of financial services companies and, in particular, of loan loss provisions.
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