Lack of resources and fear of the regulatory ‘cliff edge’ means that many firms outside the Big Four do not even want to compete for audits of listed companies despite calls for greater competition, while high entry costs were another barrier.

Smaller firms said that audit was not as profitable as other services and many did not want to get into listed audit as there were more lucrative opportunities and development in non-audit work with a wide range of potential clients looking for non-audit services, found research by the Financial Reporting Council (FRC) into competition in the audit market.