According to a review carried out by the FRC, while mandatory Transparency Reports broadly contain the required information, for those aware of the reports, there is a view they are too long and overly positive to be useful.

The FRC is concerned that many firms treat the reports wrongly as a marketing tool which damages their perception among stakeholders and limits their usefulness.

The review has also found that 84% of audit committee chairs were not even aware of Transparency Reports, 15% of reports were not found on firms’ websites and five of the 33 firms reviewed did not prepare a report at all.

The FRC is calling on firms to reduce the length of their Transparency Reports and explain within them the challenges they are facing in seeking to deliver consistently high-quality audits, along with their assessment of how successful they are being at meeting those challenges.

Sitting alongside the reports on audit quality that the FRC publishes, Transparency Reports by the firms should provide stakeholders with important information about each firm’s quality processes and initiatives to improve audit quality.

David Rule, executive director of supervision at the FRC, said: “Transparency is vital to creating public trust in audit. Despite some improvements, there is much more to be done to convince users to read and discuss these reports with the firms. Audit Committee chairs and institutional investors should be fully aware that the reports exist. The most effective way to improve the reports is a direct dialogue between stakeholders and the firms, and given this is publicly available information, there should be no barriers to this happening.”