Monthly Audit and Accounting round-up: Revised standards and audit quality in focus; plus, A busy month for UKEB
This month has been characterised by a strong focus on audit quality, with updates to core auditing standards and the ICAEW’s latest monitoring results taking centre stage. Alongside this, a new IFRS standard has been adopted and there have been developments emerging from the King’s Speech, which point to wider changes that could have a meaningful impact on the accounting profession.
Audit: Revisions to key auditing standards on fraud and going concern
The headline development this month is that the Financial Reporting Council (FRC) has finalised revisions to two key auditing standards, ISA (UK) 240 and ISA (UK) 570.
These updates sharpen expectations in two areas that sit at the heart of audit scrutiny. The revisions to ISA (UK) 240 strengthen the approach to fraud risk, placing greater emphasis on robust assessment and clearer reporting.
ISA (UK) 570 has been updated to reinforce how auditors assess and communicate going concern, reflecting heightened expectations following a number of high-profile corporate failures. Although many of the underlying principles are already embedded in UK practice, the revisions reinforce the direction of travel and the continued focus on audit transparency and credibility.
ICAEW releases its Audit Monitoring Report 2026
The past month also saw the publication of the ICAEW’s latest monitoring findings. The overall picture is encouraging. Around 73% of audits reviewed were assessed as good or generally acceptable, while the proportion requiring significant improvement has reduced to 6%. This marks the strongest position reported in recent years.
That said, the report remains clear that underlying challenges persist. Growth continues to be a double-edged sword, bringing opportunity but also placing pressure on systems and consistency. Similarly, the transition to new audit technologies and ongoing resourcing challenges are recurring themes, alongside familiar technical weaknesses in areas such as risk assessment and financial reporting, with group audits (in particular the documentation of involvement of the group auditor and planning and oversight of component auditors) as a recurring area of weakness.
In addition, the report calls for stronger challenge of management’s estimates and judgments and more careful evaluation of the work of experts and service organisations. There is also a clear expectation that substantive analytical procedures and sampling approaches are properly tailored to the specific risks of each engagement.
Overall, the direction is one of continued improvement, with an increasing emphasis on depth, consistency and professional scepticism in the most judgemental areas of the audit. However, the ICAEW notes a requirement to see a continued positive direction of travel over the coming years in order to determined that audit quality across firms has recovered to a consistently higher level.
Change to charity audit thresholds, now brought into legislation
From late 2026, the income threshold for mandatory audit will increase from £1 million to £1.5 million, with corresponding rises in asset thresholds. While designed to improve proportionality and reduce burden on smaller organisations, the practical effect will be to move a significant number of charities out of the statutory audit regime. This has clear implications for firms with charity audit portfolios, both in terms of volume and the mix of services provided.
Accounting: UKEB activity
UKEB activity this month reflects a continued focus on both post-implementation input and future standard development. This includes the official adoption of IFRS 19, permitting eligible subsidiaries to apply reduced disclosure requirements while still recognising and measuring items in accordance with full IFRS Accounting Standards. However, practitioners should remain aware that the new standard and the reduced disclosure requirements of FRS 101 cannot be adopted simultaneously.
At the same time, the UKEB has sought feedback on proposals relating to risk mitigation accounting, signalling continued engagement with complex hedge accounting issues and how these could better reflect risk management activities.
Elsewhere, targeted amendments remain on the agenda. The Board is reviewing proposed changes to IAS 28 in relation to the fair value option, alongside developments on IAS 21 covering translation to a hyperinflationary presentation currency. Collectively, these projects highlight a mix of practical implementation considerations and more technical standard‑setting issues, with a clear emphasis on ensuring that reporting requirements remain both relevant and operable for UK preparers.
Late payment measures announced in King's Speech
The proposed measures are wide-ranging, including the introduction of a 60-day cap on payment terms, mandatory interest on overdue invoices and enhanced enforcement powers for the Small Business Commissioner. The intention is to address a longstanding issue that continues to place pressure on small business cash flow and wider economic activity.
For the accounting profession, these proposals are likely to translate into increased advisory requirements. Businesses will need support in reviewing contractual arrangements, adapting payment processes and understanding the financial reporting consequences of late payment interest.
More broadly, the reforms may begin to influence how working capital is managed and monitored. Greater regulatory focus on payment practices, coupled with increased transparency expectations, could lead to more disciplined debtor management and more prominent disclosure of payment performance. These are areas where accountants and auditors will be closely involved, both in advising clients and in reflecting changes within financial reporting frameworks.
Overall, this month reflects a continuing shift towards higher expectations across both audit and accounting. Audit quality indicators are moving in a positive direction, but regulatory attention remains firmly fixed on the most judgmental areas of the audit process. At the same time, broader policy initiatives such as late payment reform underline how external legislative change can quickly shape the priorities and workload of the profession.