The latest Financial Reporting Council (FRC) report on competition and resilience points to a ‘failing’ audit market with a ‘limited choice of audit firm and lack of effective competition’.

The FRC said that increased competition and choice have recently ‘tailed off, and that more entities tendering for an auditor are struggling to identify firms willing to bid. The top four audit firms still dominate the market, resulting in limited choices for businesses and ongoing concerns about resilience’. 

The audit market is dominated by the Big Four audit firms with mid-tier firms handling only 8% of all listed audits, which in total generated £1bn in fees. The proportion of fees is concentrated in the FTSE 100, accounting for £550m of listed audit contracts, which are all audited by the Big Four.