One in 20 registered audit firms quit the market in last year

ALMOST one in 20 firms registered to audit company accounts in the UK have quit the line of work in the past year, the FRC’s annual assessment of the profession has found.

According to statistics from the reporting watchdog, the number of registered audit firms fell 4.9% between 31 December 2013 and 2014, compared to 3.8% during 2013.

The decrease coincides with an increase with the proportion from companies filing annual accounts at Companies House that are audit exempt, from 70.2% in 2009/10 to 73.5% un 2012/13. As at 31 December 2014, the number of registered audit was 6,635, a double-digit fall of 11% over the previous four years.

It follows increases in the audit exemption in 2004 and 2008, while earlier this year a new EU accounting directive slipped into force under which member states had the option to significantly raise the thresholds of businesses not required to file full, audited financial statements for those with a turnover below €12m (£10.3m) and a balance sheet below €6m.

BIS, after consulting on the proposed new regime for small companies in 2014, has now ratified the raised accounting threshold to its maximum amount, while limiting the information that can be required in small company accounts.

The FRC’s Key Facts and Trends report, which provides key data on the accountancy profession, its member bodies and firms, also found that total membership of the accountancy bodies continues to grow steadily. The seven bodies included in the report have over 335,000 members in the UK and Ireland and over 485,000 members worldwide.

There was a decline in the number of students in the UK and Ireland, falling by 0.8% between 2010-2014. However, worldwide, the number of student qualifying with UK bodies increased by 3% in 2014.

Paul George (pictured), the FRC’s executive director conduct, said: “It is encouraging that accountancy remains an attractive profession and membership continues to grow.

However, student numbers have grown at a lower rate globally compared to last year and have declined slightly in the UK and the Republic of Ireland. The long-term health of the profession relies on sufficient bright young accountants coming into it to replace those who leave at the end of their careers.”