FRC Assesses Competition Barriers for UK Audit

The UK’s Financial Reporting Council (FRC) has published a summary of its research assessing barriers to entry and growth faced by audit firms. The watchdog found that capacity constraints, recruitment and retention challenges, as well as regulatory requirements, were the biggest obstacles for smaller firms looking to expand. A collaborative, cross-system approach is required to promote greater competition and choice in the audit market, the FRC reiterated, pointing to initiatives such as Scalebox – which it created last year to support smaller firms in their compliance with regulatory standards. Additionally, audit firms are encouraged to better prioritise cultures that support their staff and attract new talent, while maintaining high standards. “While ensuring high standards of audit quality is paramount, a resilient, competitive audit market is crucial for upholding the UK’s status as a leading financial centre and protecting the public interest,” said Mark Babington, Executive Director of Regulatory Standards at the FRC. “The research makes clear that tackling the barriers to audit firm growth requires a coordinated approach to foster an environment that supports sustainable growth at all audit firms, greater capacity and choice in the market, while maintaining high standards.” The FRC plans to conduct further market studies to understand the resilience of the UK audit market. 

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