Regulatory Alerts2026-07-10
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IKO: A Sharp Instrument Yields a Sharp Image
The Dutch Authority for the Financial Markets (AFM) issued a July 2026 report investigating the Internal Quality Assessment (IKO) processes of six externally audited accounting firms to address concerns about the instrument's effectiveness. The regulator found that current IKO selections suffer from low unpredictability and poor representativeness, often covering only 1.5% of the portfolio and allowing firms to anticipate audits, which leads to a significant discrepancy between internal findings and external regulatory inspections. The AFM mandates that accounting firms strengthen their IKO systems by implementing random, unpredictable, and representative selection methods to ensure accurate monitoring and foster a culture of continuous learning and quality improvement.