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The accounting profession is regulated by various authorities across the globe. The primary function of these bodies is to ensure transparency and uphold the profession’s integrity. The work of these bodies is aimed at the best interests of the investors and the public at large. 

The Financial Reporting Council (FRC) is one such body that regulates the auditors, accountants, and actuaries in UK. FRC sets the UK’s Corporate Governance and Stewardship Codes and standards for accounting and actuarial work. As the Competent Authority in the UK, the FRC sets and monitors auditing and ethical standards and enforces audit quality, much like the US PCAOB, Singapore ACRA and India NFRA.  

The FRC recently published the twenty-first edition of Key Facts and Trends in the Accounting Profession. The publication provides statistical information and trends on the members and students in the accountancy and auditing profession in UK. The trends are based on the information received from various accountancy bodies. The report highlights the growth in membership of these accountancy bodies. The seven bodies in the report have nearly 400,000 members in the UK and Republic of Ireland (ROI) and around 600,000 members worldwide. The growth in membership between 2021 and 2022 was 2.1% in the UK and ROI and 2.4% worldwide.  

Among other statistics like the increase of students in the profession, the report also highlights the fee income for audit and non-audit services for more than thirty audit firms with Public Interest Entity (PIE) clients for 2022-year end. The audit fee income for the Big Four UK Firms increased by 7.6% in 2022 compared with a 6.5% increase in the previous year. Audit fee income for audit firms outside the Big Four increased by 23.3% in 2022 compared with a 12.5% increase in 2021 (bearing in mind that this is based on additional input from three PIE audit firms not falling within the purview of Big 4). 

Auditors today operate in a digital world which is a challenging environment coupled with increased responsibilities. An audit firm must deploy the most skilled resources and advanced tools to provide the assurance and confidence that investors need. Inputs from senior and specialized audit team members further enhances the quality. There is a general correlation between commensurate audit fees with the quality of audits. 

The FRC report also calls attention to diversity at audit firms. The data shows a diversity of senior management at PIE audit firms. Firms with 200 to 2000 employees had the highest percentage of female senior managers at the manager and director level with 45% and 28%, respectively. It was noticed that for all firms the percentage of female senior managers was the greatest at manager level and lowest at partner level.  

KNAV UK Audit Partner, Devendra Kankonkar, who operates from the London office said, “At KNAV, diversity is the thread that runs across the fabric of the firm. Leadership is just not providing guidance but also communicating right message at the right time. It’s about developing relationships on the platform of trust and vision. At KNAV we are proud to be led by a woman, Nishta Sharma, as our Global Managing Partner”. Nishta Sharma operates from the firm headquarters in Atlanta, US. 

Going forward, the UK Government plans to improve the regulation of auditors and accountants and regulate prominent company directors for the first time. To achieve this, it will create a new regulator named the Auditing, Reporting, and Governance Authority (ARGA) to replace the FRC. The UK Government plans to implement the ARGA by April 2024, with other reforms implemented after that.