Big Four hike fees after regulations tighten
Audit fees at the Big Four accountancy firms Deloitte, PwC, EY and KPMG increased by 6.9% last year as they increased their charges to account for tougher regulations introduced by the regulator.
The Financial Reporting Council’s (FRC) 2020 Key Facts and Trends in the Accountancy Profession (KFAT) has revealed that the combined UK auditing income of the Big Four rose to £2.3 billion, with fees growing at more than four times the 1.7% rate reported in 2018.
Overall, audit fees increased by 7.1%, despite a 20.8% decline in the amount of fees they made from providing consulting advice to audit clients, which the FRC described as a “positive market shift”.
The figures will raise accentuate concerns about the dominance of the four companies in the audit sector, which three government-sponsored reports have sought to address following a series of accounting scandals in recent years.
The business department is expected to consult publicly on implementing the recommendations from the three reports aimed at improving competition and standards within the sector.
David Rule, executive director of supervision at the FRC, said: “The latest data across the firms reveals some welcome market developments as the FRC continues to drive audit quality improvements. New ethical standards introduced by the FRC have also sought to reduce possible conflicts of interest between audit and non-audit work.
“Improving choice and resilience in the market also remains a major focus ahead of wider government reform and planned operational separation of the audit practices of the Big Four.”