FRC Warns Big Four Over Growing Use of Offshore Audit Teams
The UK regulator says overseas teams are increasingly performing work requiring professional judgement and will monitor the largest firms’ extended-team models over the coming year
The UK’s Financial Reporting Council has raised concerns about the increasing use of offshore teams by the Big Four, warning that overseas staff are now performing more audit work requiring professional judgement.
Offshore audit centres were initially used largely for routine and administrative work. Their role has expanded as the largest firms seek to address staffing pressures, reduce costs and build round-the-clock delivery models across their international networks.
The FRC said the growing involvement of extended teams in judgement-intensive work creates additional risks around supervision, communication, review and accountability. Responsibility for the quality of a UK audit remains with the UK engagement partner and firm, regardless of where individual procedures are performed.
Approximately one-quarter of the people working in KPMG UK’s audit practice are now based offshore, according to reporting on the regulator’s findings. The other Big Four firms also make extensive use of overseas delivery centres, particularly in India.
The regulator’s review also identified weaknesses in the operation of international network controls. A small number of overseas PwC member firms had reportedly provided non-audit services to UK audit clients without obtaining the approvals required under the firm’s independence procedures. PwC has undertaken a more detailed review of the affected cases.
The FRC said it would monitor the largest firms’ use of extended audit teams during the coming year. Firms are expected to demonstrate that their systems of quality management adequately identify and control the risks arising from the location, experience and supervision of audit personnel.
The warning formed part of the FRC’s 2026 review of audit quality, which combined findings from inspections of individual audit files with an assessment of the systems used by firms to manage quality across their practices.
The regulator’s concerns do not amount to a finding that offshore work is inherently lower quality. Instead, they reflect the increasingly complex operating model through which UK audits are delivered and the need for firms to ensure that responsibility is not diluted across multiple entities and jurisdictions.
Related Coverage
Financial Times: Big Four’s use of offshore auditors concerns UK watchdog
Reports the FRC’s concerns about judgement-intensive work being transferred overseas and provides firm-level staffing figures.
Financial Reporting Council: Annual Review of Audit Quality 2026
The regulator’s primary publication covering audit inspections and the firms’ systems of quality management.
The Accountant: Big Four offshore audit model draws regulatory scrutiny
Provides a specialist accounting-industry summary of the FRC’s findings and their implications.
Big4News: KPMG Tops UK Big Four in FRC’s 2026 Audit Inspections
Covers the file-inspection results released as part of the same annual regulatory review.
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