TLDR:

The dominance of the Big Four audit firms continues in the listed audit market as smaller firms are deterred by the challenges and regulations of the sector. Many smaller firms struggle with staff shortages and limited resources, which makes it difficult for them to compete with the larger firms. Additionally, some smaller firms are simply not interested in entering the highly regulated audit market.

‘Drudgery of audit’ puts off smaller firms

Smaller firms are being deterred from entering the audit market due to the challenges and regulations associated with the sector. The Big Four audit firms continue to dominate the listed audit market, leaving smaller firms struggling to compete.

The main reasons why smaller firms are avoiding the audit market include:

• Staff shortages
• Limited resources
• Regulatory burden
• Lack of interest

The lack of staff and resources make it difficult for smaller firms to meet the demands of the audit process. This puts them at a disadvantage compared to the larger firms, which have more capacity and resources to handle audits.

The highly regulated nature of the audit market also poses challenges for smaller firms. They must adhere to strict auditing standards and regulations, which require a significant investment of time and resources.

Furthermore, many smaller firms simply do not see audit as an attractive or lucrative area of practice. They may prefer to focus on other areas of accounting where they can provide more value to their clients.

The dominance of the Big Four audit firms in the market further exacerbates the challenges faced by smaller firms. The Big Four have a strong reputation and client base, which gives them a competitive advantage.

In conclusion, the drudgery of audit, along with staff shortages, limited resources, and regulatory burdens, discourages smaller firms from entering the audit market. The dominance of the Big Four firms in the market also creates a barrier to entry for smaller firms. As a result, the audit sector remains heavily concentrated with few alternatives for businesses seeking audit services.