The Financial Reporting Council (FRC) has unveiled a new initiative aimed at bolstering the capabilities and quality management of smaller audit firms seeking to expand their footprint in the UK Public Interest Entity (PIE) audit sector.
As part of the initiative, the regulator will introduce a novel supervisory approach tailored to elevate audit quality while accommodating the distinct needs of smaller firms.
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Eligible smaller firms will be invited to join the Scalebox Programme, collaborating with the FRC to enhance their audit quality and quality management systems.
The initiative also aims to assist the FRC in determining proportional oversight measures for less complex PIE entities.
While engaged in the programme, participating firms demonstrating commitment and progress may experience reduced formal inspection, supervision, and registration requirements during the fiscal years 2025/26 and 2026/27.
The programme acknowledges the resource and capacity constraints faced by smaller firms in the PIE market.
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By GlobalDataEach firm will receive a bespoke work programme developed by the FRC, ensuring audit quality remains central.
Firms are required to join the Scalebox and engage in activities aligned with the international auditing standard ISQM (UK) 1.
FRC CEO Richard Moriarty 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.
“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.”
In addition to the initiative, the FRC has also been conducting investigations into the audit practices of larger firms.
In July 2025, the FRC launched an investigation into Deloitte regarding its audits of the mining company Glencore.
At the time, the FRC said it has “commenced an investigation in relation to the statutory audits conducted by Deloitte of the financial statements of Glencore and Glencore Energy UK for the financial years ended 31 December 2013 to 31 December 2020”.
The investigation formed part of a broader review of the Big Four accountancy firms.
Earlier, in June 2024, the FRC initiated a probe into Deloitte and Azets concerning their audit work with Stenn, a collapsed invoice-financing company.
