There seems to be a common misconception in the UK that only the nation’s top accounting firms can handle the audits of large companies. However, the truth is that many businesses rely on the expertise of smaller firms to provide insightful reports.
While the UK’s Big Four accountancy firms generally offer good audit services, there have been growing concerns from the UK’s financial watchdog that some of the work undertaken may not meet the standard required.
In its latest annual report published last month, the Financial Reporting Council (FRC), found that 33 per cent of all audits still needed improvements.
Unfortunately, this is the third year running in which around 30 per cent of audits were classified as unsatisfactory and in need of improvements by the watchdog.
The damaging impacts of unsatisfactory audits are evident in the failure of businesses, such as BHS and Carillion, where the work conducted failed to spot significant risks in the companies’ finances.
Perhaps, unsurprisingly, the data shows that an increasing number of businesses are turning to smaller firms to conduct their audits.
The latest information from Adviser Rankings Ltd, show that a growing number of FTSE 250 companies are now using the services of top 20 firms and smaller, to deliver their audits.
In fact, many smaller listed companies can see the cost benefits of engaging with similarly skilled auditors in regional practices.
So, the answer to the question do you need a Big Four audit? No. Many firms are exploring the audit expertise outside the Big Four and are increasingly looking to mid-sized regional firms to deliver a solution.
Many of these firms report a more personable and consistent audit service while delivering the same quality of advice and insight offered by much larger firms.
If you are looking for further information on audits or would like to discuss how we might be able to help your business, please contact your Seymour Taylor representative today or for new enquiries email enquiries@stca.co.uk or call 01494 552100.
This blog is for guidance only, professional advice should be obtained before acting on any information contained herein. The information was correct at the time of publishing 14 December 2021.