Audit giant Deloitte has raised concerns about the quality of its own auditor, BDO, City AM understands, piling further pressure on the mid-tier firm after the regulator labelled its work “unacceptable” for the fifth year in a row.

Deloitte has warned BDO its audit quality has not been good enough and urged the firm to lift its standards in future, a source close to the matter told City AM.

The warnings will add to scrutiny of BDO’s audit practice after the Financial Reporting Council (FRC) said in July the company’s overall audit work had fallen below expected standards.

BDO has now “received unsatisfactory results from regulatory inspections” consistently for five years, the FRC said.

The accounting and advisory firm was found to have performed the worst among the six largest audit firms, which also includes the Big Four: Deloitte, KPMG, PwC and EY. According to the regulator’s findings, 50 per cent of BDO’s 14 individual audits in its 2025/26 cycle required improvement, with one audit needing significant improvement.

While the FRC noted minor improvements in certain areas, it said overall audit quality at BDO had not improved as expected and it plans to tighten its scrutiny of the company.

The FRC is set to begin targeted follow-up inspections on specific, individual audits to assess whether BDO has taken actions to address the problems.

The mid-tier advisory firm audits London-listed firms including Ted Baker, AJ Bell, and pub chain Young’s and Co.

BDO declined to comment. Deloitte declined to comment.

Audit failings leading to millions of pounds of fines

Over the last few years, BDO has faced a series of regulatory fines from the FRC over audit failings.

Last November, the regulator slammed the firm for two of its former audit engagement partners faking audit evidence and slapped it with a £6.5m fine.

In May this year, the regulator hit BDO and the former head of its London audit group with a £2m fine over its work on the construction engineering firm NMCN, imposing sanctions on the firm and former partner, Geraint Jones, for significant and serious breaches during the 2019 statutory audit of the company.