UK Accounting Sector Shows Mixed Performance as Audit Reform Uncertainty Continues

The UK accounting industry is experiencing a period of cautious optimism mixed with uncertainty, as recent data reveals a complex picture of modest growth alongside notable challenges. While the profession continues to attract new talent and maintain steady membership numbers, the audit market remains in a holding pattern as firms await clarity on long-delayed regulatory reforms.

Revenue Growth Slows Across the Sector

After experiencing growth of 11.9% in 2022 and 11.1% in 2023, UK Big Four audit firms saw fee income increase by just 1.2% in 2024. This dramatic slowdown reflects broader economic pressures and uncertainty surrounding the regulatory landscape. Non-Big Four firms performed better, achieving fee income growth of 9.8%, though this still represents a significant decline from the 18.5% growth recorded in 2022 and 13.2% in 2023.

Despite the overall slowdown, audit-specific income remained resilient. Big Four firms increased audit fee income by 9.9% in 2024, while non-Big Four audit firms achieved a 15.4% increase. These figures demonstrate that whilst advisory and consulting revenues may have softened, core audit work continues to generate strong demand across the market.

Audit Firm Numbers Continue to Decline

The number of statutory audit firms registered with recognised supervisory bodies fell by 6.9% in 2024. This decline highlights ongoing consolidation within the profession, with voluntary surrenders of audit registrations outpacing new applications despite a 25.5% increase in firms seeking registration. Industry experts attribute this trend to uncertainty surrounding proposed audit reforms, which have remained stalled in parliament.

The reduction in registered firms raises concerns about market concentration and capacity, particularly as the profession navigates heightened expectations around audit quality and regulatory compliance. Will Holt from ICAEW noted that the audit market is stuck in a holding pattern as the profession waits for reforms to pass through parliament, urging government to bring forward legislation at the earliest opportunity.

Membership and Student Numbers Show Resilience

Despite challenges in the audit market, the broader accounting profession continues to demonstrate strength. Membership of accountancy bodies grew by 0.8% in the UK and Republic of Ireland and 1.1% worldwide between 2023 and 2024. This steady growth indicates that chartered accountancy remains an attractive career path for professionals seeking stability and advancement.

Student numbers have shown remarkable resilience, with ICAEW reporting growth of 26.4% in the UK and Republic of Ireland between 2020 and 2024. This trend suggests confidence in the long-term prospects of the profession, particularly as firms invest heavily in modernising qualifications to reflect emerging technologies and changing client expectations.

Non-Audit Services Begin Recovery

After experiencing declines in recent years, non-audit services to audit clients showed signs of recovery in 2024. Big Four firms increased such work by 2.5%, reversing the 8.9% decrease recorded in 2023. Non-Big Four firms performed even better, achieving growth of 8.2% compared to a 4.5% decline the previous year. This recovery reflects improving business confidence and increased demand for advisory services related to digital transformation, ESG reporting, and strategic planning.

Technology and Adaptation

The accounting sector faces significant transformation driven by technological advancement and evolving client needs. Over 75% of firms report increased investment in technology, with artificial intelligence and automation becoming central to service delivery and operational efficiency. Firms are also prioritising environmental, social, and governance capabilities as sustainability reporting becomes mandatory for more businesses.

For accountants in Bolton and across the UK, adapting to these changes whilst maintaining audit quality and professional standards remains paramount. The sector's ability to navigate regulatory uncertainty, embrace innovation, and continue attracting talent will determine its success in the years ahead.

As the profession awaits clarity on audit reform and the establishment of the Audit, Reporting and Governance Authority (ARGA), firms must balance immediate operational challenges with long-term strategic positioning. Those who successfully integrate new technologies, diversify revenue streams, and maintain exceptional client service will be best positioned to thrive in an increasingly competitive marketplace.

Need expert guidance navigating the changing accounting landscape? The experienced team at YRF Accountants understands the challenges facing UK businesses and can provide the strategic support you need. Contact us today to discuss how we can help your business adapt and succeed.