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The Financial Reporting Council (FRC) has announced a new scheme to help small audit firms build capacity and expand their role in the UK Public Interest Entity (PIE) market.
The regulator said the Scalebox Programme would provide firms with tailored support to improve audit quality and strengthen systems of quality management. In return, participating firms would see a reduction in some inspection, supervision and registration requirements during 2025/26 and 2026/27.
According to the FRC, the scheme was designed to reflect the resource constraints faced by smaller practices seeking to compete in the PIE sector. Each firm will follow a bespoke programme but will be expected to comply with the international auditing standard ISQM (UK) 1, which requires rigorous internal quality management systems.
Richard Moriarty, chief executive of the FRC, said: “I am keen for the FRC to support the growth of those firms that want to establish a greater presence in the PIE audit market who commit to delivering high quality and safeguarding the broader public interest that audit supports.
“Whilst in this programme, we will offer participating firms a more forbearing formal regulatory oversight and focus our resources instead on supporting their improvement. Accountability for improvement will, however, rest firmly with the audit firms themselves and a condition of remaining in the programme is that we see progress over time.”
The FRC said the initiative would also help it assess how best to apply proportionate oversight to less complex PIE audits.
