FRC launches audit campaign to support SMEs

The Financial Reporting Council (FRC) has just launched a campaign to help SMEs access audit services and reduce reporting burdens. This audit campaign will last a year and it aims to improve SME access to capital, thereby supporting their growth.

Why an audit campaign?

The FRC notes that SMEs collectively comprise 99% of all private sector businesses in the UK. However, it also believes that access to audit services is frequently vital for SMEs who want to raise capital, grow and create new jobs. The problem is that many SMEs find it difficult to access audit services at a reasonable cost.

As a result, the FRC has devised an audit campaign that will run throughout 2025. FRC Chief Executive, Richard Moriarty, has summed up the aim of the campaign as follows:

“SMEs are an important bedrock for the UK economy as drivers of innovation and job creation with their ability to access capital often dependent on having audited accounts. I’m keen that the FRC does what it can to support their growth and their ability to scale up.

This campaign across 2025 is focused on analysing how the audit market is working for SMEs, including the reporting and audit requirements they face, and ensuring they are audited proportionately including considering any steps the FRC can take to support this vital part of the UK economy.”

How will the campaign work?

The campaign will have three main strands of activity. These are:

• A market study on SMEs
• Guidance to support the proportionate audit of SMEs
• Support materials for SMEs.

Let’s look at these three strands of the audit campaign in more detail.

Market study on SMEs

The FRC launched its market study SMEs on 3rd February 2025. This exploratory study aims to find out more about the challenges SMEs face in relation to audit and reporting. It also wants to discover where auditors face difficulties in auditing SMEs, as well as to understand the decision-making processes for SMEs who procure voluntary audits.

If you want to respond to this study, you need to do so by 25th April 2025. You can download the consultation document and supporting information here. The FRC is also holding roundtable sessions on Microsoft Teams for interested stakeholders. Two are specifically for SMEs and their advisors. These will take place on 13th March and 27th March 2025.

Guidance to support the proportionate audit of SMEs

During the spring of 2025, the FRC plans to issue a Practice Note to support auditors of SMEs. The FRC notes that International Standards on Audit are designed to be scalable, meaning they can be applied proportionately to the size of a company. That said, these scalability provisions are not always used well or consistently. The new Practice Note will be designed to help auditors find opportunities to proportionately apply auditing standards. After a consultation, the FRC will publish the final version of the Practice Note before the end of 2025.

Support materials for SMEs

The final strand of the audit campaign will see the publication of support materials for SMEs. These will help SMEs better understand auditing requirements, how they are applied and how businesses can confidently engage in both audit tendering and the audit process itself.

Does your SME need an audit?

If your SME needs an audit to help you access capital (or for any other reason), talk to THP today. We’ve been auditing SMEs since the 1980s and offer highly competitive rates. To learn more and get an instant online quote, visit our audit services page.