Big Four firms grab greater share of U.K. audit market
The Big Four firms have taken a bigger share of the audit market in the United Kingdom over the past year, despite a series of accounting scandals, according to a new analysis from the U.K.’s Financial Reporting Council.
The latest edition of the FRC’s Key Facts and Trends in the Accountancy Profession found Monday that the Big Four increased their combined “total fee income” by 4.7 percent to £10.95 billion ($14.08 billion) and “audit fee income” by 1.7 percent to £2.1 billion ($2.7 billion). In contrast, the total fee income at non-Big Four audit firms declined 8.1 percent while “audit fee income” fell 6.3 percent (compared to a 3 percent increase in 2016/17). Approximately 100 percent of FTSE 100 companies are now audited by the Big Four, according to the report.
The average audit fee income last year for all firms with public interest entity clients per responsible individual was £1.46 million ($1.88 million), an increase of £0.16 million ($0.21 million), or 12.3 percent, from 2017.
The FRC report found that the number of audit firms that are registered to perform audit work in the U.K. and the Republic of Ireland declined 4.7 percent in 2017-18, down from 5,660 to 5,394 audit firms. That’s in part because of a decline in both the number of sole practitioner audit firms (down from 2,733 to 2,558) and firms with two to six principals (down from 2,618 to 2,534).
Despite these statistics, membership of the accounting bodies continues to grow. The seven professional accounting organizations overseen by the FRC have more than 365,000 members in the U.K. and Ireland and nearly 550,000 members worldwide. The average annual growth in the UK and Ireland between 2014 to 2018 was 2.2 percent and 3.1 percent worldwide.
In addition, there are over 164,000 accounting students in the U.K. and Ireland and almost 600,000 worldwide. Student numbers in the U.K. and Ireland increased 0.2 percent, and 1.5 percent worldwide, from 2017 to 2018, indicating accounting remains a popular profession in the U.K. and the Republic of Ireland.