The UK's biggest accountancy firms enjoyed a 13 per cent rise in income over the 2006-07 financial year, research published yesterday revealed.
The report will add to concern among watchdogs that the UK's four biggest accountants – PricewaterhouseCoopers, KPMG, Deloitte, and Ernst & Young – are overly dominant, particularly in the market for audit work. No FTSE 100 company employs an auditor from outside of the big four.
IFSL, the financial services consultant, said that annual fee income for the 50 biggest accountants rose to £8.8bn last year, with the big four accounting for 73 per cent – lower than the high-water mark of 79 per cent in 2002, but up on last year's 72 per cent.
Duncan McKenzie, the report's author, warned: "Ernst & Young's fee income is the smallest of the big four, but still nearly three times that of the next largest firm, Grant Thornton, whose income rose over a third last year following the merger with Robson Rhodes."
Mr McKenzie said that the regulatory focus on the big four's audit accounts had forced them to pull back from offering other accountancy services to clients. Auditors' share of other work fell to 44 per cent last year from 75 per cent five years ago.
However, this reduction may not be enough to prevent accountancy regulators from stepping up their efforts to reduce the dependency of large companies on a small handful of firms for audit work.
The Financial Reporting Council is due shortly to publish new recommendations on the audit market following a two-year investigation of the big four's dominance.
IFSL said that PWC remained the biggest firm by a large margin, with fee income last year totalling £2.1bn. It was followed by Deloitte, with income of £1.8bn, KPMG, with income of £1.5bn, and Ernst & Young, with income of £1.1bn.Reuse content