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A UK regulator has strongly criticised audits by BDO, saying the work fell “significantly short” as it concluded that the mid-tier accounting firm was the worst performer among its peers during annual inspections. The findings by the Financial Reporting Council highlight the challenge BDO faces as it tries to break the stranglehold of the Big Four firms — Deloitte, EY, KPMG and PwC — on listed company audits while ensuring its work complies with the watchdog’s requirements.  The FRC said only 50 per cent of the BDO audits that it inspected in its latest annual review required “no more than limited improvement”, a better performance than last year. Then, just 38 per cent of BDO’s audits were ranked as satisfactory.  But the regulator said the most recent BDO audit work it scrutinised fell “significantly short of expectations”, adding: “BDO must urgently and robustly reassess how to improve its audit quality.” The FRC said BDO would remain under close supervision, adding: “We expect BDO to not be complacent and ensure change happens at pace.” In the regulator’s annual review of leading accounting firms’ audit assignments, the FRC scrutinised a total of 104 pieces of work completed by the Big Four plus BDO and Forvis Mazars. In the case of BDO, the FRC noted that the firm had audited 6,805 businesses in total, 206 of which were within the scope of its review. Of these, a sample of 14 audit files were selected for inspection. The FRC has been trying to improve the quality of audits of large UK companies after accounting firms failed to raise red flags ahead of high-profile corporate failures — such as construction company Carillion and bakery chain Patisserie Valerie.