Recommendation 22

All parties agreed that the market was not currently competitive, and that one measure needed for the market to become effective was to have more audit firms in the market.56 Only eight audit firms are accredited to audit local authorities.57 Of these eight, EY and Grant Thornton together carry out around 70% of local authority audits.58 Grant Thornton considered that audit firm KPMG’s exit in the last contract round in 2017 left the remaining firms in the market with insufficient capacity to take on the additional audits.59 EY warned that audit firms that had left the market would no longer have the necessary specialist teams in place, if they ever considered re-entering the market.60