Accounting firms risk losing up to £1.2bn a year under UK government proposals to exempt medium-sized companies from mandatory audits. The plan, part of a corporate reporting overhaul, would apply to groups with annual revenue under £54mn or 250 staff, aligning them with small companies already exempt from independent audits.
The Financial Reporting Council estimates average audit fees for medium-sized firms at £30,900 in 2024, suggesting significant fee losses across roughly 40,000 affected companies. Senior executives warn of partner cuts, reduced graduate recruitment, and a shift toward advisory services as audit work declines.
While some medium-sized firms may still commission audits voluntarily—especially if required by banks—the changes threaten mid-tier firms that dominate SME audits, challenging years of efforts to reduce reliance on the Big Four.
Source: Financial Times Companies · Summarized by HeadlinesBriefing