Dear SPA member,
Thank you for your help so far. It was noted by the FRC and we were invited to see them.
I have noticed that when the FRC reports on the outcome of market studies, it highlights the percentages of firms holding particular views. The deadline for comment is 25 April 2025. Lack of response would probably be interpreted as our members and your firms being content with the level and type of auditing standards and of the regulation that currently exist. Tactically it makes sense to ask as many of you and your staff and friends as possible to email competition@frc.org.uk with non-standard text. Each one of you will effectively have the same vote as a Big 4 firm. Our subs. are for the firm or company so please encourage your colleagues to join with you and let us put them on our membership list.
The deadline for comment for the FRC’s audit market study for SMEs is 25 April 2025. Following your help (audit and non-audit firms) I have sent in, on your behalf, a robust reply (https://spa.org.uk/comments-on-less-complex-entities-audit/) on SME’s, NHS and Local Councils. If it was not for you SPA (me Peter Hollis and Paul Clegg) would not have been invited to meet FRC. We have been invited again later this month. I understand the FRC likes to summarise the percentage of firms voting for or against a particular problem and solution. Your vote on the various issues, therefore, really matters. The email addess for sending comments is competition@frc.org.uk
The questions being asked are as follows:
Q.1 How well is the UK audit market currently functioning for SMEs?
Q.2 What are the reasons for SMEs obtaining financial audits? What are the primary drivers in instances where an audit may not be mandatory to an SME?
Q.3 What, if any, challenges do SMEs experience in relation to audits (e.g. in finding an auditor) and engaging with the audit process ?
Q.4 What, if any, challenges do audit firms experience in relation to audits for SMEs?
Q.5 What, if anything, would you like to see change in relation to SME audits? For example any regulatory / policy changes and / or any specific changes taken by the Government, FRC, firms, companies or others?
Q.6 What if any forthcoming developments might the FRC want to consider as part of the market study?
The topics that you may wish to express views for or against under Q.4 and/ or other questions may include the following:
- The problems of having to cope with the full ISAs that run to over 1,000 pages.
- The length of audit packs and their associated checklists and the amount of box-ticking, note making and its impact on your service at a reasonable cost to your client. Does the length of the audit pack discourage audit work?
- The frequency with which standards and regulations are revised together with problems this may cause. Does it increase stress as well as the cost of training, CPD and responsibility
- The new rules requiring small firms to notify the ICAEW before taking on higher risk clients.
- The level of CPD required and the associated cost.
- The nature of audit inspections such as whether they are focused too much on detailed process rather than outcomes and principles
- The economics of being in audit practice.
- Your willingness to stay in the audit market or why you left it.
- The problems or not that you find with the ethical standards.
Under Q.5 you may want to refer to early adoption of the ISA for LCE which runs to 158 pages (the FRC alternative seems to be a Practice Note to explain the scalability and proportionality parts of the full ISAs, and the need to continue to be judged against the full ISAs).
You may also want to comment on the FRC suggestions for guidance to SMEs on tendering procedures and on the application of audits.
As members (in my opinion) you are being over regulated and why?
I appreciate that this may take some of your valuable time, but silence will be interpreted as being content (some might say happy) with the current level of auditing standards and audit regulation. You may want to bcc me in so that we can make sure that your points are covered in our discussions with the FRC.
Without your help we would not be having this discussion. I thank you for your work and time to support SPA which has taken us to another level. Your submission will make a difference it already has.
Best wishes,
Howard
