BDO's five-year streak of subpar audit performance has come under intense scrutiny once again, with the Financial Reporting Council (FRC) labelling its quality 'unacceptable' in its latest annual report. The six largest UK audit practices have been ranked, and BDO is resoundingly at the bottom, trailing behind the likes of KPMG, EY, Deloitte, PwC, and Grant Thornton.
A staggering 50% of the 14 audits reviewed by the FRC's 2025/26 inspection cycle required improvement, with a single audit singled out for substantial enhancement. Although minor strides were noted in some areas, BDO's overall performance fell short of expectations, prompting the FRC to intensify its scrutiny.
The regulator has announced an increase in inspections at BDO, coupled with targeted reviews on select audits to monitor the firm's progress towards rectifying its shortcomings. In a measured response, Dominic Stammers, BDO's head of audit, acknowledged the need for improvement: "There is more work to do to achieve consistent high quality across all our audits."
Recent history has shown that BDO faces severe consequences when its audit standards falter. A £6.5 million fine – later reduced to £5.8 million – was imposed in November last year following an investigation into dishonest conduct, which included fabricating evidence and issuing unauthorised reports. This penalty was compounded by an additional payment of £716,000 towards the FRC's costs.
Furthermore, a £2 million fine was levied on both BDO and former partner Geraint Jones in May this year for serious breaches identified during NMCN's 2019 statutory audit. These penalties underscore the FRC's zero-tolerance stance on audit failings and its commitment to holding firms and individuals accountable.