Skills Gap Limits Small UK Audit Firms’ Appetite for Big Clients

Problems finding and retaining skilled staff and heavy regulatory burdens continue to squeeze small auditors out of the market for vetting big companies’ financial statements, according to a Thursday report by the UK’s accounting watchdog.

The Financial Reporting Council asked 135 smaller firms for their views on auditing public interest entities, largely FTSE 350 companies. They reported growing demand for audit services that they struggled to meet because of staffing difficulties, red tape, and high costs. Public interest entity audits are subject to stricter checks and regulation by the FRC than audits of smaller firms.

The UK government has proposed ...