Exclusive: Big Four giant turns on its own auditor BDO over sloppy standards

Deloitte, the renowned audit giant, has expressed concerns over the quality of its own auditor, BDO, as per City AM's sources. This follows the regulator's repeated labeling of BDO's work as "unacceptable" for the past five years. Deloitte has warned BDO about its lackluster audit quality and urged them to improve their standards in the future, according to a source close to the situation.

The Financial Reporting Council (FRC) has recently reported that BDO's overall audit work has fallen below expected standards, leading to unsatisfactory results from regulatory inspections for five consecutive years. BDO ranks among the worst of the six largest audit firms, which also includes Deloitte, KPMG, PwC, and EY. The regulator's findings indicate that 50% of BDO's 14 individual audits in its 2025/26 cycle need improvement, with one audit demanding significant enhancements.

Although there have been minor improvements in certain areas, the FRC remains unsatisfied and plans to intensify its scrutiny of BDO. The FRC intends to initiate targeted follow-up inspections on specific audits to determine if BDO has addressed the identified issues. BDO, an advisory firm that audits London-listed entities such as Ted Baker, AJ Bell, and Young’s and Co., declined to comment on the matter.

Deloitte also declined to comment. BDO has been grappling with a series of regulatory fines from the FRC due to audit malpractices over the past few years. Last November, the regulator penalized BDO with a £6.5m fine for two of its former audit engagement partners forging audit evidence. In May this year, BDO and the former head of its London audit group were slapped with a £2m fine for significant and serious breaches during the 2019 statutory audit of a construction engineering firm.