Financial Reporting Council launches bold new programme to build capability and support growth by small UK audit firms
News types: Operating Procedures
Published: 11 September 2025
The Financial Reporting Council (FRC) today announced a new initiative to support the development of the capability and quality management by small audit firms looking to establish a greater presence in the UK Public Interest Entity (PIE) audit market. This initiative will introduce a new and more proportionate supervisory approach, designed to enhance audit quality and reflect the unique needs of smaller firms.
Small firms will be invited to participate in a new Scalebox Programme where they will work closely with the FRC to develop their audit quality and systems of quality management and support the FRC in assessing what is proportionate in the oversight of less complex PIE entities. Whilst in the programme, the participating firms in the programme, subject to their commitment and progress, can expect a reduction in certain formal inspection, supervision and registration requirements during 2025/26 and 2026/27.
The approach recognises that smaller firms face unique resource and capacity constraints in building their presence in the PIE market. Each participating firm will receive a bespoke programme of work developed by the FRC, with audit quality remaining at the heart of the approach. Firms will be required to join the FRC's Scalebox and engage in activities designed to enhance their system of quality management in compliance with the recently implemented international auditing standard (ISQM (UK) 1).
Richard Moriarty, FRC CEO"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. Small firms have told us to do this they need time and space to build capability in the PIE market itself. Our new Scalebox Programme intends to meet this challenge head on and help the FRC look closely at what proportionate oversight of smaller PIE audits looks like.
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.”
Listen to the latest ‘In Conversation’ podcast episode in which Kate O’Neill, Director of Stakeholder Engagement and Corporate Affairs, discusses the initiative to build capacity for smaller firms with Andrew Meek, Director of Audit Firm Supervision.
View the Building Capacity for Smaller Firms launch explainer.