The Financial Reporting Council (FRC) has published its annual
Audit Market and Competition Update, showing that initiatives to
promote a more resilient and competitive audit market have
supported firms outside of the Big Four to build their share of
Public Interest Entity (PIE) audit engagements.
While the Big Four audit firms (Deloitte, EY, KPMG, PwC) continue
to dominate the market, the report shows that
non-Big Four firms continued to increase their share of PIE audit
engagements to 40% in 2024, up from 22% at the start of the
decade.
In addition to outlining the latest developments relating to
audit market dynamics and competition, the report outlines recent
progress across several key areas where the FRC is
proportionately facilitating a well-functioning audit market to
support competition and growth: building capacity for smaller
firms, improving access to audit services and embedding
proportionality to reduce burdens. Key initiatives include the
Future of Audit Supervision Strategy, which is evolving how the
FRC supervises firms to enable market resilience, the System of
Quality Management Scalebox Programme supporting smaller audit
firms to build their capabilities, and the SME market study
identifying practical ways to improve audit access for UK SMEs –
which represent 99% of the private sector.
Richard Moriarty, FRC CEO, said:
“A well-functioning audit market is essential for maintaining
confidence in UK plc and enabling businesses to attract the
capital they need to grow. While we've seen encouraging progress,
with non-Big Four firms now conducting 40% of PIE audits,
achieving a resilient audit market requires collective action
from all stakeholders – audit firms, companies, and regulators
alike. The FRC is committed to working collaboratively to embed
proportionality, reduce unnecessary burdens, and build capacity
across the whole market.”
Read the FRC's Audit Market and
Competition Developments report.
For more on the FRC's collaborative approach to proportionate
regulation, listen to the FRC's In Conversation podcast episode,
“Supporting Growth through Proportionate Regulation”
featuring Kate O'Neill, Director of Stakeholder Engagement and
Corporate Affairs, Laura Warren, Director of Market Intelligence
and Insights, and Dhruve Shah, Director of Professional Bodies
Supervision. The FRC continues to monitor trends in the audit
market and welcomes feedback from market participants at competition@frc.org.uk.
