Are de-listings a ‘barrier’ to PIE audit market entry?

A common theme in our conversations with firms across the Public Interest Entity (PIE) audit sector is how smaller audit firms can be supported in making the transition into the market in the first place.

Among the barriers to PIE market entry typically referenced by firms are the costs of doing so – such as the costs of investing in talent and technology – or the changing regulatory expectations as firms move from ICAEW to Financial Reporting Council (FRC) supervision. In this analysis, we are looking in-depth at another issue that has been mentioned as a potential barrier: the de-listing of PIEs audited by a smaller firm.

When an entity de-lists from the UK main market, it will no longer meet some of the PIE criteria, as defined by the FRC. As a result, there’s a good chance the entity will no longer require an audit performed to PIE standards.

We’ve heard from some auditors that this can pose a risk for audit firms with small PIE audit market shares: they have invested the time and money in building up their PIE audit capabilities and market share, only for some of this investment to come to nothing when one of their PIE audits opts to de-list. Given smaller audit firms have fewer PIE audits, the impact of a single PIE audit de-listing could be disproportionately larger than it would be for a larger audit firm. In this piece, we look at whether smaller audit firms are more exposed to de-listings, and what impact the de-listing of a PIE audit might have on its auditor. Our key findings are set out below.

2025’s de-listings

For this analysis, we have looked at UK main market de-listings in 2025. Of the 111 entities that de-listed from the market in the year, 59% had a Big Four auditor at the time of their departure; while 41% had an auditor from outside the Big Four. This aligns with the overall PIE audit market share held by these firms – according to the FRC, in 2024, 60% of PIE audits were being delivered by Big Four firms, with 40% delivered by firms outside the Big Four. So, on the basis of last year’s figures at least, de-listings aren’t something that are more likely to occur for a non-Big Four firm.

What impact does de-listing have on an audit firm?

But while smaller auditors aren’t over-represented among the entities leaving the main market, a de-listing may still have a disproportionate impact on them. As noted above, smaller audit firms will have fewer PIE audits, so the loss of one PIE audit will likely have a larger impact on their market share and PIE audit revenue in comparison to a larger firm. There may also be a knock-on effect on the perception of the audit firm among PIEs and potential PIEs looking for a new auditor. By contrast, a typical de-listing will have a much smaller impact on a larger audit firm’s PIE audit revenue, market share or reputation.

However, the impact of an audited entity de-listing can be more nuanced than this. For instance, were a smaller audit firm to be retained as auditor by the de-listed entity, there may be reduced effort and time pressures for the firm if it no longer has to carry out the same level of quality review, and there may be fewer additional external disclosures to review than might be required for a listed entity. At the same time, restrictions on non-audit services are different for PIEs and non-PIEs, so a de-listing may allow a retained audit firm to take on more engagements with the de-listed entity. And for a larger firm, it may be the case that their de-listed audits could be more likely to choose a smaller auditor when there is an opportunity to do so – it might be the case, for example, that there are fewer incentives for a non-PIE to engage a ‘big name’ auditor.

2025’s listings

As a counterpoint to the de-listings data above, we’ve also looked at new listings for 2025. Here, we found that smaller audit firms are over-represented compared to their overall share of PIE audits: of the 20 newly listed firms in 2025, just 45% had a Big Four auditor.

Although the volume of new listings was low in 2025, the relative over-representation of smaller audit firms aligns with data from the FRC that shows non-Big Four firms steadily increasing their share of the PIE audit market – the non-Big Four firm market share has almost doubled from 22% in 2020 to 40% in 2024. A growing willingness among newly-minted PIEs to appoint a non-Big Four auditor might be part of what is driving this change.

Key takeaways

Smaller audit firms are proportionately represented within the delistings data in relation to their PIE audit market share. Nonetheless, in some ways, the consequences of a delisting may have a disproportionate impact on smaller audit firms given their smaller market share and lower PIE audit incomes. But these consequences may be balanced out in the form of the lower costs needed to deliver a de-listed entity’s audit and additional non-audit engagements that might be possible with a non-PIE entity.

Importantly, the data also highlights emerging opportunities at the margins of the PIE audit market: new PIEs appear more likely to be receptive to appointing non-Big Four firms as their auditor. This suggests a potential avenue for smaller firms looking to strengthen their PIE audit market presence and compete in the evolving PIE audit landscape.

Footnotes

*A PIE is defined by the FRC as (a) an issuer whose transferable securities are admitted to trading on a UK regulated market; (b) a credit institution within the meaning of Article 4(1)(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council, which is a CRR firm within the meaning of Article 4(1)(2A) of that Regulation; (c) a person who would be an insurance undertaking as defined in Article 2(1) of Council Directive 91/674/EEC of 19 December 1991 of the European Parliament and of the Council on the annual accounts and consolidated accounts of insurance undertakings as that Article had effect immediately before exit day, were the United Kingdom a Member State.

** Our analysis stems from the publicly available FTSE main market and regulatory news service (RNS) data. We define a PIEs ‘de-listing’ from the stock market as the entity’s ‘Notice of cancellation of admission to trading on the London Stock Exchange’, alongside the month-on-month movement of entities on the LSE’s issuer list throughout 2025.