2025 Audit Trust Index
Audit plays a critical role in capital markets by underpinning confidence in large companies and shaping investor decision-making. This confidence has been fractured since 2018 with a number of high-profile corporate failures, highlighting the need to better safeguard the interests of financial stakeholders and broader society. Much positive action has happened across the audit and regulatory landscape over the last six years but there is more still to do.
As an autonomous research and policy institute we bring together leaders from across the profession to support reform, shape best practice in UK public interest entity (PIE) audits, and drive meaningful change. It is essential, therefore, to understand how PIE audits are perceived by key stakeholder groups. Our annual Audit Trust Index will understand and track this sentiment in detail over time.
Explore our findings
Audit Value: Strong Signal of Progress
Stakeholder confidence in the value of external audits has strengthened significantly, reflecting a clear shift from 2024 when perceptions were more mixed. This is a clear sign that reforms and investment in quality are delivering results. While the trend is positive and most stakeholders are satisfied with the current market structure, we recognise that concerns remain around audit fees and competition, particularly amongst governance stakeholders i.e. Audit Committee Chairs, suggesting that there is a desire for increased competition in the market.
Key takeaway
The rise in confidence is encouraging, but concerns around audit fees and market competition warrant closer attention. Through our forthcoming work, we will explore the underlying drivers behind audit fees to improve transparency and collaborate with the watchdog on initiatives that promote choice and proportionate oversight across the profession.
Explore our findings
Fraud: Bridging the Divide on Responsibilities
While the majority of stakeholders agree that auditors are responding adequately to fraud risks, understanding of the audit scope and auditor’s role on fraud remains a prevalent issue. Despite recent legislation reinforcing that the responsibility for preventing and detecting fraud lies with management, gaps remain. Auditors are required to provide reasonable assurance that financial statements are free from material misstatements, whether caused by fraud or error, and whilst they must report suspicions of fraud, they are not responsible for its prevention and detection. Bridging this gap in understanding is critical to aligning expectations and maintaining trust in the audit process.
Key takeaway
We will focus on reducing misconceptions about the auditor’s role on fraud by working with stakeholders to reinforce the distinction between management’s responsibilities and the auditor’s role i.e. that prevention and detection of fraud lies with management, whilst auditors provide reasonable assurance on financial statements.
AI in Audit: Opportunity with Risks That Must Be Managed
AI is viewed as a catalyst for improving audit quality. However, concerns remain around fabricated outputs, over-reliance, skills gaps, and data security risks. These risks, if not properly managed, could undermine trust in the audit process. Audit firms face two distinct challenges: using AI responsibly within audits and auditing AI systems at the companies they audit, both of which require proportionate safeguards and clear guidance.
Key takeaway
Responsible integration of technology is essential to ensure AI strengthens audit integrity rather than compromises it. We will continue to examine how AI adoption can strengthen audit quality while mitigating risks and work with our members to provide insights and develop forward looking positions on the adoption of emerging technology.
Strong levels of confidence in auditors’ independence and objectivity
The survey results reveal a high level of confidence in auditors’ independence and objectivity among respondents. While this is encouraging, it does not lessen the audit profession’s responsibility to uphold its independence, both in actuality and public perception. This calls for an ongoing, proactive commitment to upholding and strengthening ethical standards.
Key takeaway
We urge stakeholders across the market to ensure that work on ongoing reform will recognise the progress that has already been made to strengthen existing rules governing the provision of non-audit services by auditors. Future legislation should reflect the developing needs of the market for non-financial assurance services to be provided alongside audit.
