diff --git a/src/libs/ReportUtils.ts b/src/libs/ReportUtils.ts
index f35ab637aea1..dcecdf3c1eb9 100644
--- a/src/libs/ReportUtils.ts
+++ b/src/libs/ReportUtils.ts
@@ -1886,12 +1886,6 @@ function getDefaultWorkspaceAvatarTestID(workspaceName: string): string {
     return !alphaNumeric ? defaultAvatarBuildingIconTestID : `SvgDefaultAvatar_${alphaNumeric[0]} Icon`;
 }
 
-function getWorkspaceAvatar(report: OnyxEntry<Report>): AvatarSource {
-    const workspaceName = getPolicyName(report, false, allPolicies?.[`${ONYXKEYS.COLLECTION.POLICY}${report?.policyID}`]);
-    const avatar = allPolicies?.[`${ONYXKEYS.COLLECTION.POLICY}${report?.policyID}`]?.avatarURL ?? '';
-    return !isEmpty(avatar) ? avatar : getDefaultWorkspaceAvatar(workspaceName);
-}
-
 /**
  * Helper method to return the default avatar associated with the given reportID
  */
@@ -1959,20 +1953,19 @@ function getWorkspaceIcon(report: OnyxInputOrEntry<Report>, policy?: OnyxInputOr
     const workspaceName = getPolicyName(report, false, policy);
     const cacheKey = report?.policyID ?? workspaceName;
     const iconFromCache = workSpaceIconsCache.get(cacheKey);
-    const avatarURL = allPolicies?.[`${ONYXKEYS.COLLECTION.POLICY}${report?.policyID}`]?.avatarURL;
-
-    const isSameAvatarURL = iconFromCache?.icon?.source === avatarURL;
-    const isDefaultWorkspaceAvatar = !avatarURL && typeof iconFromCache?.icon?.source !== 'string';
-    const hasWorkSpaceNameChanged = iconFromCache?.name !== workspaceName;
-    if (iconFromCache && (isSameAvatarURL || isDefaultWorkspaceAvatar) && !hasWorkSpaceNameChanged) {
-        return iconFromCache.icon;
-    }
     // disabling to protect against empty strings
     // eslint-disable-next-line @typescript-eslint/prefer-nullish-coalescing
     const policyAvatarURL = report?.policyAvatar || allPolicies?.[`${ONYXKEYS.COLLECTION.POLICY}${report?.policyID}`]?.avatarURL;
     // eslint-disable-next-line @typescript-eslint/prefer-nullish-coalescing
     const policyExpenseChatAvatarSource = policyAvatarURL || getDefaultWorkspaceAvatar(workspaceName);
 
+    const isSameAvatarURL = iconFromCache?.icon?.source === policyExpenseChatAvatarSource;
+    const hasWorkSpaceNameChanged = iconFromCache?.name !== workspaceName;
+
+    if (iconFromCache && (isSameAvatarURL || report?.policyAvatar === undefined) && !hasWorkSpaceNameChanged) {
+        return iconFromCache.icon;
+    }
+
     const workspaceIcon: Icon = {
         source: policyExpenseChatAvatarSource ?? '',
         type: CONST.ICON_TYPE_WORKSPACE,
@@ -7968,7 +7961,6 @@ export {
     getTransactionsWithReceipts,
     getUserDetailTooltipText,
     getWhisperDisplayNames,
-    getWorkspaceAvatar,
     getWorkspaceChats,
     getWorkspaceIcon,
     goBackToDetailsPage,
diff --git a/src/pages/ReportAvatar.tsx b/src/pages/ReportAvatar.tsx
index eeb6829e7fc0..eb921032979b 100644
--- a/src/pages/ReportAvatar.tsx
+++ b/src/pages/ReportAvatar.tsx
@@ -24,7 +24,7 @@ function ReportAvatar({report = {} as Report, route, policies, isLoadingApp = tr
     const policyID = route.params.policyID ?? '-1';
     const policy = policies?.[`${ONYXKEYS.COLLECTION.POLICY}${policyID}`];
     const policyName = ReportUtils.getPolicyName(report, false, policy);
-    const avatarURL = ReportUtils.getWorkspaceAvatar(report);
+    const avatarURL = ReportUtils.getWorkspaceIcon(report).source;
 
     return (
         <AttachmentModal
diff --git a/src/pages/home/report/ReportActionItem.tsx b/src/pages/home/report/ReportActionItem.tsx
index 3d69f029b8bd..8ea9a3c6aa40 100644
--- a/src/pages/home/report/ReportActionItem.tsx
+++ b/src/pages/home/report/ReportActionItem.tsx
@@ -1045,6 +1045,7 @@ export default withOnyx<ReportActionItemProps, ReportActionItemOnyxProps>({
             prevProps.shouldHideThreadDividerLine === nextProps.shouldHideThreadDividerLine &&
             prevProps.report?.total === nextProps.report?.total &&
             prevProps.report?.nonReimbursableTotal === nextProps.report?.nonReimbursableTotal &&
+            prevProps.report?.policyAvatar === nextProps.report?.policyAvatar &&
             prevProps.linkedReportActionID === nextProps.linkedReportActionID &&
             lodashIsEqual(prevProps.report.fieldList, nextProps.report.fieldList) &&
             lodashIsEqual(prevProps.transactionThreadReport, nextProps.transactionThreadReport) &&
diff --git a/src/pages/home/report/ReportActionItemSingle.tsx b/src/pages/home/report/ReportActionItemSingle.tsx
index 95a7332f0606..0e58296d39f2 100644
--- a/src/pages/home/report/ReportActionItemSingle.tsx
+++ b/src/pages/home/report/ReportActionItemSingle.tsx
@@ -100,7 +100,7 @@ function ReportActionItemSingle({
     if (isWorkspaceActor) {
         displayName = ReportUtils.getPolicyName(report);
         actorHint = displayName;
-        avatarSource = ReportUtils.getWorkspaceAvatar(report);
+        avatarSource = ReportUtils.getWorkspaceIcon(report).source;
         avatarId = report.policyID;
     } else if (action?.delegateAccountID && personalDetails[action?.delegateAccountID]) {
         // We replace the actor's email, name, and avatar with the Copilot manually for now. And only if we have their
diff --git a/tests/perf-test/ReportUtils.perf-test.ts b/tests/perf-test/ReportUtils.perf-test.ts
index 11c6d3772799..8cd531db8628 100644
--- a/tests/perf-test/ReportUtils.perf-test.ts
+++ b/tests/perf-test/ReportUtils.perf-test.ts
@@ -169,13 +169,6 @@ describe('ReportUtils', () => {
         await measureFunction(() => ReportUtils.temporary_getMoneyRequestOptions(report, policy, reportParticipants));
     });
 
-    test('[ReportUtils] getWorkspaceAvatar on 1k policies', async () => {
-        const report = createRandomReport(1);
-
-        await waitForBatchedUpdates();
-        await measureFunction(() => ReportUtils.getWorkspaceAvatar(report));
-    });
-
     test('[ReportUtils] getWorkspaceChat on 1k policies', async () => {
         const policyID = '1';
         const accountsID = Array.from({length: 20}, (v, i) => i + 1);