EY reports improved audit quality

• Key insight: Learn why Ernst & Young experienced its most dramatic turnaround in annual inspection findings.
• What's at stake: EY's standing as the top auditor for Fortune 1000 companies.
• Expert quote: "Audit quality drives how we operate..." — Joe Link, EY Americas assurance vice chair
  

Ernst & Young released its 2026 U.S. audit quality report Thursday, showing the biggest improvement ever in its annual inspection findings from the Public Company Accounting Oversight Board in 2025 after the PCAOB dinged it in 2024, with even better audit quality predicted for this year.

EY expects the Big Four Firm will sustain its record-low 5% inspection findings rate in the upcoming 2026 PCAOB inspection report. The 5% findings rate in 2025 was the best the firm has ever had, a 23-point drop from 28% in 2024.  

The six largest firms generally received a more favorable report this year from the PCAOB, but EY's report was probably the most dramatic turnaround. Three of the 64 audits reviewed in 2025 were included in Part I.A of the PCAOB's report due to the significance of the deficiencies identified, less than a 5% Part I.A deficiency rate. The identified deficiencies related to EY's testing of controls over and/or substantive testing of revenue and related accounts, income taxes, and insurance-related assets and liabilities, including insurance reserves. That was a big improvement over last year's report for EY, when 18 of the 64 audits reviewed by the PCAOB in 2024 were included in Part I.A of this report due to the significance of the deficiencies identified, a 28% Part I.A deficiency rate. 

(Read more: "PCAOB inspection reports of largest audit firms show improvements") 

"Audit quality drives how we operate and where we are going," said EY Americas assurance vice chair Joe Link in a statement. "Through innovation and empowering our people, we are consistently streamlining the experiences of our clients and our professionals, and delivering high-quality audits in a rapidly changing environment." 

EY's use of artificial intelligence for audits has helped the firm get back its mojo. The firm is attributing the improvement to its multiyear transformation and $1 billion investment in technology and talent to improve audit quality. That includes:

• Integrating AI capabilities directly into its global audit platform so 100% of EY US audit and technology risk professionals have access to agentic AI tools within EY Canvas, the global, cloud-based audit platform. EY expects agentic AI capabilities to support end-to-end audit activities by 2028.
• Shifting timelines so 69% of public company audit hours are now completed before year-end reducing year-end strain for both clients and audit teams.
• Equipping professionals at all levels with AI fluency while offering new early-career pathways to build critical judgment and risk capabilities earlier in their careers.

"Our agentic AI capabilities are shaping how data is analyzed and allowing our teams to better target the areas of highest risk," said EY Americas assurance chief technology officer Richard Jackson, who is also EY global and Americas assurance AI leader. "These capabilities help our teams stay ahead as clients' businesses and the use of AI continue to evolve." 

EY said in the report that it's the only Big Four Firm and one of 14 founding members of the Microsoft Frontier Firm Initiative, alongside Microsoft and The Harvard Business School AI Institute. It claimed to be No. 1 auditor of companies on the Fortune 1000 list, of the top 500 companies on the Russell 3000 index, and among the Big Four of companies that went public over a period of 11 years.

According to a recent survey of EY's people, 99% of the respondents believe they have a personal responsibility for delivering quality on their audits, 99% believe they have a personal responsibility for delivering quality on their audits, 98% say they understand that consistently performing quality audits serves the public interest, and 99% say they understand that consistently performing quality audits serves the public interest.

Introductory bullet points created by AI with editorial review