Stay informed with free updates
Simply sign up to the Accountancy myFT Digest — delivered directly to your inbox.
The Big Four accounting firms maintained their iron grip on auditing the UK’s largest companies last year despite attempts to open up the market, the industry watchdog has found.
Firms outside the Big Four of Deloitte, EY, KPMG and PwC barely increased their share of audits for so-called public interest entities (PIEs) — which encompass large listed companies, banks and insurers — according to Financial Reporting Council figures published on Thursday.
Their share of PIE audits increased by 1 percentage point in 2024 to 40 per cent, the FRC said. However, the Big Four retained a stranglehold on the audits of large listed companies, for which fees are far higher than other PIEs, taking 98 per cent of the fees paid by the FTSE 350.
The watchdog and government have for several years tried unsuccessfully to increase the number of audit firms with the skill to audit PIEs.
HSBC in 2021 struggled to attract pitches for its mandatory audit re-tender because of concerns over possible conflicts with lucrative consulting contracts held by the Big Four firms.
In September, the FRC launched a coaching programme for small firms, reducing the inspections and permissions they need to seek to take on new audits of PIEs. Successive governments have given their backing to an audit reform bill that includes measures to increase the number of players at the top end of the audit market.
However, the 29 PIE companies that switched auditors in 2024 all moved from one Big Four firm to another. That was the highest figure for five years and the first time in that period that no audits were transferred to a firm outside the Big Four.
The shake-up pushed EY to the bottom of the Big Four for PIE audit earnings, with a share 4 percentage points lower than KPMG, the FRC data showed.
PwC kept the top spot with a 28 per cent share of PIE audit fees, which totalled about £1.3bn in 2024. However, FTSE 350 audit fees only increased 3 per cent that year compared with a 14 per cent rise in 2023.
Some mid-tier firms have shunned PIE audit work. Grant Thornton cut its number of public interest clients by more than 70 per cent between 2016 and 2022, largely because audits of listed companies are subject to more rigorous supervision.
Richard Moriarty, FRC chief executive, said: “While we’ve seen encouraging progress, with non-Big Four firms now conducting 40 per cent 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.”
