Smaller firms eye chunk of Big Four’s audit work with uptick in clients

By:

Professional Services Editor

Add as a preferred source on Google
The UK's innovation economy enjoyed a bump in funding in the third quarter.

Non-Big Four firms have experienced an uptick on audit work across FTSE 250 and all of the main market, as competition with the audit giants continues.

According to a key facts and trends report by the Financial Reporting Council (FRC), firms outside of the Big Four have seen an uptick in audit work.

In 2023, the five largest firms outside the Big Four audit firms Deloitte, EY, KPMG, and PwC, audited 11.6 per cent (29) of the FTSE 250 companies, compared to 28 in 2022.

While three firms outside these five – and the Big Four – also audited four per cent (10) of the FTSE 250 companies in 2023, up from 2.4 per cent in 2022.

While those smaller firms outside the next five from the Big Four, saw an increase in work from other UK main market clients, as it audited 26.3 per cent of the sector, compared to 21.5 per cent in 2022. While work for all of the main market was also up to 39.8 per cent, up from 32.4 per cent.

The Big Four UK is still considerably larger, however, for FTSE 250 clients, it experienced a drop to 84.4 per cent, down from 86.4 per cent.

Similar for other UK main market, its audit numbers dropped to 44.7 per cent, down from 49.4 per cent, while all main market fell to 40.4 per cent [2022: 46.8 per cent].

The non-Big Four firms are also saw its fees increase at a higher percentage than the Big Four.

In 2023, total fee income for Big Four UK firms grew by 11.1 per cent, while non-Big Four firms saw an increase of 13.2 per cent. While income from audit fee for the Big Four grew by 19.5 per cent in 2023, compared to 23.2 per cent for the non-Big Four firms.

The fee income for non-audit work to audit clients fell by 8.9 per cent for Big Four UK firms and 4.5 per cent for non-Big Four firms in 2023.

The FRC noted that this is even with one more non-Big Four firm answering our survey this year.

In its foreword of the report, the watchdog noted that “competition between the Big Four audit firms and their competitors also remains a major focus.”

Adding that, “last year, the five largest firms outside the Big Four UK and non-UK firms audited 25 FTSE 350 companies; this year, they audited 30.”

Back in July, non-Big Four firm, MHA reported that its revenue jumped by nearly 30 per cent to £180m. Over the last four years, the UK arm of Baker Tilly International doubled its revenue from £90m (2020) to £180m (2024).