The FRC has placed the UK’s audit sector on notice, over how they use overseas service delivery centres.
These overseas centres are mostly located in India, but also the Philippines and South Africa, and FRC has told firms they can outsource the work, but they cannot outsource accountability!
In its recent annual quality report the FRC acknowledged the Big 4 firms were increasing their use of offshore teams in UK audits. This is a change from the work usually undertaken by these teams – which was mainly routine testing and administrative support.
These overseas teams are not small either, with KPMG UK’s latest transparency report showing around a quarter of staff in its audit practice are based offshore.
The FRC said firms needed to future-proof themselves against the risks of using overseas staff models, and experts believe the message marks a clear change in how future audit quality reviews (AQR) will be conducted.
