home  news  study zone  career advice  pq awards  free mag  advertise  contact  nq mag
PQ magazine is for part qualified accountants.

Read the latest web issue here – if you like what you see sign up today

Latest News



Big 4 still dominating the market

08 August 2017

The Big 4’s continual domination of the UK audit market was worth a total of £3.2bn in audit and non-audit fees in 2016/17, says the FRC in its Developments in Audit 2016/17 report.

Between them the Big 4 earn 80% of the total available audit fee income up for grabs from public interest entities (PIEs) and 85% of the non-audit fees from audit clients. The UK audit and non-audit market, worth a total of £4bn, remains concentrated across the four firms – EY, KPMG, PwC and Deloitte.

The FRC felt there are two consequences of this concentration in the market, with the balance between audit fees and non-audit fee income having particular resonance for audit regulators everywhere (and that includes the FRC).

The first potential impact is on investor perception of audit firms’ motivation and confidence in audit quality. This, says the FRC, points to the critical importance of audit firm governance and culture to ensure in the public interest the highest standards of ethical behavior.

The other worry is market risk, given the reliance on a small number of firms.

FRC stressed that it is important for the health of the audit market in the UK that audit firms do not lose their focus on their audit practices, and that they continue to invest in the quality of audit work being done.

The report claims that the introduction of mandatory audit tendering and periodic rotation, as well as restrictions on services, has resulted in greater competition on the grounds of audit quality between the established Big 4.

The FRC’s Melanie McLaren revealed that the audit market remains even more concentrated for listed entities. She said that 99% of the FTSE 100 are audited by the Big 4 and 96% of the FTSE 250.

[«all news]
preload preload preload preload
Subscribe to RSS