FRC study provides insights for NHS audit market reform
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Published: 14 May 2025
The Financial Reporting Council (FRC) has today published its final report from its market study into the audit market for NHS providers and Integrated Care Boards (ICBs) providing insight to support government’s reform of the wider local audit system.
The market study was launched in July 2024 as part of the FRC’s previous system leadership role for local audit in response to growing concerns about challenges NHS bodies are facing in appointing and retaining auditors.
In the report, the FRC found that while the audit market for NHS bodies in England is working more effectively than the audit market for local authorities, there are issues which may risk future resilience.
In particular, the FRC has identified three key issues in the NHS audit market:
- While audit firms active in the market have capacity to supply audit services to their current NHS audit clients, they face barriers to expanding their capacity.
- Audit firms report problems with the audit tender processes and a lack of pre-bidding engagement between NHS bodies and audit firms.
- NHS bodies and audit firms potentially have different priorities with audits, with the former often prioritising meeting audit deadlines and achieving financial targets over ensuring good quality accounts and audits.
The report sets out a range of potential short and medium to long-term remedies which can be considered to address these issues as part of the Government’s wider reform programme for the local audit system.
Sarah Rapson, FRC Executive Director of Supervision"While we have not seen the same challenges as have been experienced with local authority financial reporting and audit, it is vital to address the issues in the audit market for NHS bodies to maintain its resilience.
These findings and their potential remedies will help support the Government’s wider reform programme for the local audit system, work which the FRC is also contributing to in our regulatory capacity."