Throughout the three-year transitional period, all four firms have made significant improvements to their governance to prioritise the delivery of audit quality.

This includes the creation of independent audit boards chaired by Audit Non-Executives, improved transparency on financial transactions between the audit and non-audit business, and greater accountability at firm level for the delivery of operational separation outcomes.

The firms have also developed audit specific cultures, with behaviours focussed on challenge, openness and professional scepticism.

All four firms have met the 2024 deadline set by the FRC to implement the principles of operational separation. As set out in the Operational Separation Principles, the FRC will publish an assessment of the firms’ compliance each year, following the transition period.

Introduced in 2020, operational separation is a world leading initiative, which required the UK’s four largest audit firms to voluntarily split their UK audit and non-audit practices. The key objective of operational separation is to ensure that audit practices are focused above all on delivery of high-quality audit in the public interest, and do not rely on persistent cross subsidies from the rest of the firm.

Sarah Rapson, Executive Director of Supervision, said: “The FRC is pleased with the spirit in which the firms have embraced operational separation and the progress achieved to date.

“Since 2020 there have been notable improvements in audit quality at the Big Four which has been underpinned by wider regulatory improvements.

“The FRC will continue to monitor the firms for compliance with the principles of operational separation alongside wider supervisory efforts to further improve trust in UK businesses to support investment and growth.”