FTSE 100 audit market nears £900m in annual fee income

Despite attempts by regulators to reform the audit market, including the ongoing Competition and Markets Authority (CMA) market review, the Big Four audit firms continue to dominate the £899m listed audit market, according to Accountancy’s exclusive FTSE 100 Auditors Survey

The market, now worth nearly £900m, has remained static despite the UK and EU rule changes that came into force in 2016, which brought in mandatory tendering, audit firm rotation and a cap on non-audit service fees. PwC remains the largest auditor, both in terms of fees and clients, but competition between the Big Four has been fiercer than in previous years.

There is still total domination of FTSE 100 audit by the Big Four firms, with mid-tiers Grant Thornton and BDO each holding one audit, accounting for 1.7% of total audit fees at £1.53m.

The survey shows significant change in the last five years. Audit fees paid by the UK’s top 100 listed companies increased once more, up 4.9% at £668m compared with £637m in 2017’s survey, a 27% increase on the £528m paid in 2014. However total audit fees including non-audit services were £899m in 2018, only a 0.4% increase on the £895m earned in 2017.

PwC is still the largest auditor in this market segment, both in terms of value and number of audits, with 34 audit clients compared to 39 in 2014. This earned the company £257m in audit fees, down 13% from last year’s £296m but still the largest total value.

KPMG, with 24 clients, remains second largest and its earnings rose by nearly 40% to 2018. EY has the fewest clients, with 17, but is ahead of Deloitte with earnings of £147m, an 8% increase compared to 2017 earnings of £136m. This means that EY has seen its fees from the FTSE 100 increase nearly two and a half times from 2014. At fourth in terms of audit fees, Deloitte's 23 clients earned it fees of £106m, an 18% hike on £90m in 2017.

BDO continues to provide one FTSE 100 company with audit services, with Randgold Resources worth £725,000 in fees, and Grant Thornton returned by default to the list through the re‑entry of GVC, worth £804,000.

For more, read Accountancy’s FTSE100: Auditors Survey here

 

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