The construction giant Carillion collapsed eight years ago this month. The FCA finally issued fines to its two finance directors for failing in their oversight and reporting duties.

Audit and corporate governance reform, as outlined in the Brydon and Kingman reviews, has been on the table for successive governments since that point, but proposed reforms have never been brought before parliament.

In 2026, we are looking at a vastly different audit market than the one in place when Carillion went under. The profession, alongside the Financial Reporting Council (FRC), has made its own changes, addressing many of the concerns raised in the wake of Carillion. 

Alan Vallance, ICAEW’s CEO, says: “It’s frustrating that eight years since the collapse of Carillion, audit and corporate governance reforms still haven’t happened, though with the changes the profession has made, audit quality and firm governance are in a very different and vastly improved place.”

Here are four ways the audit profession has changed since January 2018.

The big firms have separated audit from consultancy

The big four firms completed operational separation of their audit services in 2024, creating independent audit boards chaired by audit non-executives. This has increased transparency around audit and non-audit financial transactions. Those firms have also developed more audit-specific cultures, with more focus on professional judgement and scepticism.

Audit quality has improved – particularly at larger firms

By the metrics of ICAEW’s Audit Monitoring report and the FRC’s Audit Quality Reviews, audit quality has been steadily improving over the past eight years. The last Audit Monitoring Report showed that 90% of audits by big firms were of a good or generally acceptable standard.

That’s not to say that there is no room for improvement – smaller firms have some issues in areas such as professional judgement and risk assessments – it is clear that audit quality is less of an issue. And updated standards such as ISQM1 have pushed firms to address audit quality more directly.

“Audit quality over the past few years, since John Kingman did his seminal review, has tracked consistently upwards, particularly amongst the largest firms,” FRC Chief Executive Richard Moriarty told the Following the Rules podcast. “And of course, the FRC and the firms in the profession deserve some credit for that.”

The FRC has refocused on improving audit quality across the board

The FRC has approached supervising audit firms in new ways. “We look not just at inspections of audit files, but increasingly, we are turning our attention to systems of quality management and assurance within the firms,” Moriarty said. “So not just doing spear phishing of particular files that may be of high risk, but going beyond that, to hold the firm to account.”

There’s been a refocus on leadership too, says Moriarty: “What quality management systems that you have? How does your leadership, how does your culture, how does your learning and investment programs go into making high quality, high ethical standards, audits across the piece.”

Part of the reason audit quality has tracked up over time, says Moriarty, “is because we are providing that focus around leadership, investment, culture and systems of quality management within the firms.”

Technology is playing a bigger role in audit

Technology is playing a larger role within the audit and assurance space, improving audit quality and efficiency. While agentic and generative AI tools are still new and are being tried with some caution by firms, automation and machine learning has allowed auditors to analyse larger data sets and spot anomalies and issues such as material fraud more easily.

ICAEW’s Head of Audit and Assurance Strategy Alex Russell said that AI would play a bigger role in the audit profession in 2026, and by embracing technology (while being aware of the risks), audit firms could improve quality and efficiency.

Despite the work that’s been done in the last eight years, Vallance thinks the government needs to do more. “While we recognise the government has had other priorities it has had ample time to pass this legislation,” he says, “To make the UK the top global destination for investment, we agree with Richard Moriarty that these reforms should be brought forward and urge the government to do so.”