REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE EUROPEAN SYSTEMIC RISK BOARD Joint Report on developments in the EU market for statutory audit services to public-interest entities from 2019 to 2021
Date: 2024-03-05
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: EU Member State, accountant, audit, auditing, financial control, management audit, market supervision, provision of services, services of general interest

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 5.3.2024  COM(2024) 102 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE EUROPEAN SYSTEMIC RISK BOARD  Joint Report on developments in the EU market for statutory audit services to public-interest entities from 2019 to 2021  
 
 
REPORT FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND 
THE EUROPEAN SYSTEMIC RISK BOARD  

Joint Report on developments in the EU market for statutory audit services to 
public-interest entities from 2019 to 2021 

1. 

INTRODUCTION 

This joint report assesses developments in the EU market for carrying out statutory audits 
on public-interest entities (PIEs) from 2019 to 2021. It focuses on: 

−  market concentration; 

− 

− 

the risks arising from audit quality deficiencies; and  

the performance of audit committees. 

It is the third report drawn up pursuant to Article 27 of Regulation (EU) No 537/2014(1) 
(‘the Regulation’). The first market monitoring report(2) covered developments from 2014 
to 2015, and the second report(3) covered developments from 2016 to 2018. 

The Committee of European Auditing Oversight Bodies (CEAOB) prepared this report. 
Unless specified otherwise, reports from the national competent authorities responsible for 
audit oversight (NCAs) are the main source of data. The data mostly refers to 2020 and 
2021, and was collected in 2022. 

For the first time, the report includes data collected from Norway. It is used in paragraph 
2.1 on ‘market overview’ and paragraph 2.2 on ‘market concentration’. No data has been 
collected for the United  Kingdom (UK). Where  2018 comparatives are included in  this 
report, and unless specified otherwise, UK data is included in the 2018 figures. 

2.  DEVELOPMENTS IN THE EU MARKET FOR STATUTORY AUDITS OF PIES 

2.1.  Market overview 

In 2021, there were 200 484 statutory auditors and 22 427 audit firms registered in the EU 
and Norway. Table 1 shows the figures for both 2021 and 2018 (without the UK).  The 
number of audit practitioners (servicing PIE or non-PIE audit clients) fell by 6% from 2018 
and the number of registered audit firms fell by 11%. Audit firms auditing PIEs represent 
close to 4% of all registered audit firms, consistent with the share in 2018. 

(1) Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific 
requirements  regarding  statutory  audit  of  public-interest  entities  and  repealing  Commission  Decision 
2005/909/EC (OJ L 158, 27.5.2014, p. 77). 

(2)  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52017DC0464. 
(3)  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52021DC0029. 

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The number of statutory auditors employed by and associated with audit firms (as partners 
or otherwise) increased by 7%. 

Table 1:  EU registered statutory auditors and audit firms (2018-2021)(4) 

Statutory auditors  213 299 

2018 

2021 
200 484 

Change 
-6% 

Statutory auditors employed by or associated  
as partners or otherwise with an audit firm 
Audit firms 
Of which, audit firms auditing PIEs 

47 944 

51 388 

7% 

25 110 
1 090 

22 427 
1 008 

-11% 
-8% 

The number of PIE statutory audits increased by 11% between 2018 and 2021 (Figure 1). 
Listed companies were the biggest category of PIEs across the Member States in 2021, 
representing 37% of the total (44% in 2018). 

Joint  PIE  audits  represent  16%  of  PIE  statutory  audits.  Of  the  13  Member  States  that 
reported  joint  audits(5),  France  again  had  the  most  (87%  of  the  EU-27  and  Norway 
combined). Belgium, Croatia, Finland, Ireland and Poland reported joint audits in 2021, 
while no joint audit had been reported in those five countries in 2018. 

Figure 1:   PIEs and PIE statutory audits (2018-2021)(6) 

20.000

15.000

10.000

5.000

0

14.530 

14.906 

3%

17.033 

18.897 

11%

30%

20%

10%

0%

-10%

-20%

-30%

-40%

-50%

PIEs

2018

2021

Variation

PIE Statutory audits

The  turnover  of  audit  firms  in  the  EU-25(7)  and  Norway  auditing  PIEs  was  some  €30 
billion(8)  in  2021.  Data  for  the  10  key  audit  firms  (10KAP(9))  indicates  an  estimated 
revenue for EU-25 and Norway of around €28 billion. 

(4) Norway is included in 2021 figures, but not in 2018. UK is not included in 2021 nor in 2018 figures. 
(5) Austria, Belgium, Bulgaria, Greece, Spain, France, Finland, Croatia, Ireland, Malta, Poland, Romania and 

Sweden reported joint audits in 2021. 

(6) Norway is included in 2021 figures, but not in 2018. UK is not included in 2021 nor in 2018 figures. 
(7) No data from Belgium and Sweden. 
(8)  Data  collected  in  national  currencies  has  been  converted  into  euro  using  31/12/2021  exchange  rates. 

Source: Bloomberg. 

(9) Baker Tilly, BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars, Nexia, RSM and PwC. Largest audit 

firms in the EU as identified by the CEAOB based on the 2021 Survey. 

2 

 
  
 
 
 
 
 
Turnover figures by Member State vary widely, with Germany and France the two largest 
markets (accounting for 47% of the turnover of audit firms in the EU)(10). 

11% of the turnover of audit firms auditing PIEs, reported by firm or at network level, is 
generated by non-audit services revenue (permitted non-audit services to audited entities) 
and 56% by non-audit services (NAS) to other entities. 

10% of the total turnover of audit firms auditing PIEs in the EU was generated by revenue 
from  statutory  audits  of  PIEs  and  entities  belonging  to  a  group  of  undertakings  whose 
parent undertaking is a PIE (up from 9% in 2018). 23% was generated by revenue from 
statutory  audits  of  other  entities  (Figure  2)  (26%  in  2018).  However,  this  share  varies 
across  the  Member  States:  in  seven  countries  over  50%  of  revenue  was  generated  by 
statutory audit services but in six countries, less than a third of revenue was generated by 
statutory audits(11). 

Figure 2: Revenue breakdown of EU turnover of audit firms auditing PIEs (2021) 

10%

23%

56%

Revenues from statutory audit of
PIEs and entities belonging to a
group of undertakings whose parent
undertaking is a PIE

Revenues from the statutory audit of
other entities

Revenues from permitted NAS to
audited entities

11%

Revenues from NAS to other entities

21 out of 24 NCAs from the European Competition Network reported that in the period 
2019-2021 they did not carry out a sector inquiry in the audit market nor did they report 
any antitrust or enforcement activity in this sector. Two NCAs mentioned having analysed 
the concentration level in the audit market. One NCA mentioned an antitrust investigation 
that took place during this period (12). 

(10) Data for 25 Member States and Norway (no data from Belgium and Sweden). 
(11) No data from Belgium and Sweden. 
(12) 2 NCAs: Denmark and Spain  and 1 NCA: The Netherlands. 

3 

 
 
 
 
 
 
2.2.  Market concentration  

This report presents market data(13) for PIE statutory audits by the ‘Big Four’ (Deloitte, 
EY, KMPG and PwC), ‘CR4’ (the four biggest audit firms in each country) and the 10KAP. 

The Big Four account for over 80% of the market share in 11 Member States(14) (compared 
to 13 in 2018) and an average EU market share of 59% (down from 70% in 2018) of all 
PIE statutory audits. 

In  13  Member  States  (up  from  7  in  2018),  the  Big  Four  are  not  the  four  largest  audit 
firms(15) in terms of total  number of PIEs statutory audit opinions. The average market 
share for CR4 is 70% and 81% for 10KAP. 

Figure 3:   Audit firms’ market share in number of PIE statutory audits (2021) 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

DK CY FI SE LU BE EE AT NO NL IT ES IE DE MT LT HU EU LV CZ HR SI SK FR PL PT EL RO BG

Big 4

CR4

10KAP

The Big Four remain dominant in terms of revenue from PIE statutory audits. At EU level, 
the Big Four accounted for 86% of revenue from PIE statutory audits, and 71% of revenue 
from statutory audits of other entities (Figure 4). 

(13)  Most  NCAs  based  turnover  on  audit  firms  (as  defined  in  Article 2(3)  of  Directive  2006/43/EC)  as 
opposed  to  the  audit  network  (as  defined  in  Article 2(7)).  The  data  is  approximate  due  to  differing 
reference periods. 

(14) Austria, Belgium, Cyprus, Denmark, Estonia, Finland, Italy, Luxemburg, Norway, The Netherlands and 

Sweden. 

(15) Bulgaria, Greece, France, Croatia, Ireland, Lithuania, Latvia, Malta, Poland, Portugal, Romania, Slovakia 

and Slovenia. 

4 

 
 
 
 
 
 
 
Figure 4:  % of PIE statutory audits, % of revenue from PIE statutory audits and % 

of revenue from audits of other entities, by Member State [Big 4] (2021) 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

DK CY FI SE LU BE EE AT NO NL IT ES IE DE MT LT HU EU LV CZ HR SI SK FR PL PT EL RO BG

% of stat audits PIEs % of Rev Stat audits PIEs % of Rev from statutory audits to other entities

In terms of audit firms’ total turnover, the Big Four accounted for around 80% of the EU 
total, consistent with 2018 figures. As shown in Figure 5, individually the Big Four are the 
largest  firms  in  terms  of  market  share  of  number  of  PIE  statutory  audits,  collectively 
accounting for 59% of the market for PIE statutory audits. Mazars is the fifth largest firm, 
with 7% of market share, followed by BDO with 5% of market share.  

Figure 5:   10KAP market share of number of PIE statutory audits (2021) 

Nexia 
1%

Baker Tilly 
1%

RSM
1%

Grant Thornton 
3%

All other audit 
firms auditing 
PIEs
23%

BDO
5%Mazars
7%

Deloitte
11%

EY
14%

PwC 
18%

KPMG 
16%

Although their prevalence in terms of number of PIE audits is decreasing, the Big Four 
continue to dominate the PIE statutory audit market, with 86% of revenue for statutory 
audits of PIEs (Figure 6). This is lower than the 92% of revenue in 2018, partially explained 

5 

 
 
 
 
 
by  the  fact  that  UK  audit  firms  are  no  longer  included  in  the  EU  total,  following  the 
withdrawal of the United Kingdom from the EU. 

In the market for statutory audits of other entities, the Big Four have a share of  71% of 
revenues, up slightly from 68% in 2018. 

The  Big  Four  generate  a  significant  proportion  (around  82-84%)  of  non-audit  services 
revenue(16) from audit and non-audit clients. The situation varies across Member States. 

The estimated EU revenue structure shows that the Big Four dominate the market both in 
statutory  audits  and  in  non-audit  services  provided  by  statutory  auditors.  The  highest 
proportion of revenue of other audit firms (not the Big Four) comes from statutory audits 
of other entities (15% for the remaining 10KAP and 14% for all other firms) and from non-
audit services to other entities (13% remaining 10KAP and 5% for all other firms). The 
remaining  10KAP  have  increased  their  share  of  revenue  from  statutory  audits  of  PIEs 
(from 5% in 2018 to 9% in 2021). 

Figure 6:      EU market shares of audit firms auditing PIEs, by revenue (2021) 

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

4%
9%

14%

20%

26%

27%

14%

15%

14%

18%

18%

21%

6%
11%

15%

20%

21%

28%

5%
13%

19%

19%

21%

23%

Statutory audit of PIEs Statutory audit of other

Permitted NAS

NAS to other entities

entities

PwC

EY

KPMG

Deloitte

Remaining 10KAP

All other firms

The estimated EU revenue structure by firm in Figure 7 shows that the Big Four generate 
a higher percentage of their total revenue from statutory audits of PIEs than the remaining 
10KAP (5%) and all other firms (7%). However, the Big Four generate a lower share of 
revenue from statutory audits of other entities of total revenue than the remaining KAP10 
(45%) and all other firms (26%). 

(16) Some NCAs reported challenges in measuring non-audit services to other entities, as those are services 

outside the audit firm. 

6 

 
 
 
 
 
 
 
 
 
 
Figure 7: 

Revenue structure by firm (2021) 

57%

55%

56%

11%

20%

12%

E Y

14%

20%

11%

P W C  

12%

22%

10%

63%

10%

19%

8%

57%

10%

26%

7%

40%

10%

45%

5%

K P M G  

D E L O I T T E

A L L   O T H E R  
F I R M S

R E M A I N I N G  
1 0 K A P

Statutory audit of PIEs

Statutory audit of other entities

Permitted NAS

NAS to other entities

2.3.  Risks arising from quality deficiencies 

In total, NCAs reviewed 737 PIE audit files, mostly related to yearly inspection cycles, 
carried  out  in  2021(17).  On  average,  the  reviews  led  to  an  average  of  2.6  inspection 
findings(18) per PIE audit file. Firm-wide procedures conducted on 361 audit firms/sole 
practitioners auditing PIEs led to an average of 3.5 findings per audit firm. 

The qualitative assessment below covers the area of mitigation and systemic risk analysis. 

In previous years, the findings mostly related to deficiencies in audit firms’ internal quality 
control systems, but the recent findings(19) show that most deficiencies were found in the 
PIE audit engagement files. Two thirds of NCAs indicated that their recommendations to 
put  in  place  mitigation  measures  and  remedies  to  address  those  deficiencies  had  been 
satisfactorily implemented.  

(17)  Eight NCAs reported data referring to 3-year inspection cycles. 
(18)  Inspection findings are deficiencies in audit procedures that indicate that the audit firm did not obtain 
sufficient  appropriate  audit  evidence  to  support  its  opinion,  but  do  not  necessarily  imply  that  those 
financial statements are also materially misstated. 

(19) This analysis is based on audit inspection findings, as reported by Member States in 2020/2021, in the 
database  maintained  by  the  CEAOB  Inspection  Sub-Group.  The  CEAOB  analysed  the  database  to 
identify  themes  that  drive  dialogue  between  audit  firms  /  standard-setters  and  CEAOB  and  to  alert 
inspectors to high-risk areas. It focused on the incidence of findings by ISAs, quality control and ethics. 

7 

 
 
 
 
 
Below are the most commonly reported areas  for  mitigation and risk analysis  (where 
repeated findings were observed, i.e. the same findings were identified in the same audit 
firm/practitioners in previous inspection cycles).  

insufficient audit procedures performed and/or evidence obtained; 

•  Methodology:  
o 
o  non-compliance  with  International  Auditing  Standard  (ISA)  500  Audit 
Evidence, ISA 530 Audit Sampling, ISA 540 Auditing Accounting Estimates 
and Related Disclosures, or ISA 230 Audit Documentation; 

o  need  to  improve  audit  methodology/documentation  templates  to  achieve 

compliance with legislation/ISAs. 

•  Engagement quality control review – EQCR: 

o  failure to perform timely EQCR and/or inadequate documentation; 
o 
o 

ineffective internal monitoring on EQCRs carried out by audit partners; 
lack of consideration, in the partners’ evaluation and remuneration, of the 
deficiencies identified in relation to EQCR performance. 

•  Ethics & independence: 

o  non-audit service provision to audit clients insufficiently assessed for the 

following areas: 

▪  consider  whether  to  consult  with  the  risk  management  partner  if 

independence threats or conflicts of interest arise;  

▪  obtain and document the audit committee approval before providing 

non-audit services;  

▪  critically perform and adequately document the acceptance process, 
especially when self-review risks or conflicts of interest may arise.  

•  Audit documentation and data security: 

improvements required in archiving audit files; 

o 
o  need to improve audit documentation. 

•  Risk assessment and internal control testing: 

o 
o 

o 

insufficient risk assessment by the auditor; 
improper  identification  of  internal  general  controls  within  the  audited 
entity; 
lack of testing of internal controls. 

In five cases, NCAs discussed with regulatory colleges and within the CEAOB inspections 
subgroup whether particular shortcomings, mainly related to the overall quality of audit 
firms’ internal control systems, should qualify as systemic risks. Although the outcome 
was negative in each case, the discussions were important to enhance audit quality across 
audit firms. 

2.4.  Performance of audit committees   

Article 39 of the Audit Directive (20) sets out the main requirements for audit committees, 
their composition, tasks and interaction with the administrative or supervisory body. This 
report assesses the performance of audit committees. It is largely based on input from the 

(20) Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits 
of  annual  accounts  and  consolidated  accounts,  amending  Council  Directives  78/660/EEC  and 
83/349/EEC and repealing Council Directive 84/253/EEC (OJ L 157, 9.6.2006, p. 87). 

8 

 
 
 
audit committees themselves. The NCAs invited 1506 audit committees across Member 
States  to  reply  to  a  CEAOB  questionnaire(21)  and  about  60%  of  the  audit  committees 
(across 23 Member States) responded. 

Interaction with the administrative or supervisory body 

The  responses  show  that  the  interaction  of  audit  committees  with  the  administrative  or 
supervisory body is adequate and indicates sufficient understanding of the requirements in 
this area. Over half of the audit committees had met the administrative or supervisory body 
at least three times to communicate on its activities, issues and related recommendations 
following the statutory audit. Sometimes the management of the audited entity was present. 

About 77% of the audit committees spent between 10% and 50% of their meeting time on 
matters  related  to  the  outcome  and  monitoring  of  the  audit  when  they  met  with  the 
administrative or supervisory body (see Figure 8). 

Figure 8: 
monitoring of the audit 

Time spent by audit committees on matters related to the outcome and 

More than 50% of the 
total audit committee 
meeting time 
16%

Between 25% and 
50% of the total audit 
committee meeting 
time 
35%

Less than 10% of the 
total of audit 
committee meeting 
time 
7%

Between 10% and 
25% of the total of 
audit committee 
meeting time 
42%

Independence, including permitted non-audit services and fees cap 

Audit committees are responsible for reviewing the independence of statutory auditors or 
audit firms, including the approval of permitted non-audit services(22). In 66% of cases, 
audit committees had received written representations from the auditors. In 32% of cases, 
the audit committees had raised further questions. In 24% of cases, audit committees had 
reported  formal  discussions  with  statutory  auditors  or  audit  firms  on  the  risks  to  the 
auditor’s  independence  and  the  safeguards  applied  to  mitigate  those  risk.  2%  of  audit 
committees had not carried out any measures to monitor the auditors’ independence. 

(21)The aim of the questionnaire was to assess compliance with the requirements of the audit legislation and 
to foster the relationship between NCAs and audit committees. In 2018, the questionnaire was sent to 
2 770 audit committees across 26 Member States with a similar response rate of about 60%. 

(22) Article 4(2) and 6(2)(b) of the Regulation, Article 39(6)(e) of Directive 2006/43EC. 

9 

 
 
 
 
 
 
Figure 9:  Monitoring the independence of auditors 

Other
7%

No action to 
monitor 
independence
2%

Specific 
questionnaire
1%

Discussion on the 
threats to the auditor's 
independence
24%

Written 
representation 
from the statutory 
auditor
66%

24% of audit committees had set further criteria limiting non-audit services that would be 
permissible under the Regulation or national legislation. 

65% of audit committees (2018: about 50%) confirmed that the statutory auditor (or any 
member of its network) had submitted proposals to provide non-audit services during the 
reference period(23). 

37% of  audit committees mentioned that they  had not  examined requests for providing 
non-audit  services  under  Article 5(4)  of  the  Regulation,  which  is  a  significant  decrease 
from 80% in 2018. Half stated that they had not examined requests because the non-audit 
services were on a pre-approved list (36%) or were not permitted by the entity (14%). 

Where  audit  committees  were  involved  in  the  approval  of  non-audit  services,  audit 
committees had withheld approval in 2% of cases. The reasons mentioned for withholding 
approval  of  the  provision  of  non-audit  services  were  a  risk  to  the  independence  of  the 
statutory auditor, prohibited non-audit services under the Regulation or under national law, 
or the audit committee’s objective to enhance competition between audit firms. None of 
the audit committees identified the fee cap as a reason for that decision. 

12%  of  the  audit  committees  did  not  examine  the  non-audit  services  provided,  which 
means  they  did  not  check  that  the  entity’s  management  had  ensured  that  the  non-audit 
services provided were consistent with the approved non-audit services (nature and fees). 

The overwhelming majority of audit committees (87%) did not set a non-audit services fee 
cap lower than 70%(24) for monitoring. Only about a third reviewed the calculation made 
by the entity in relation to the permitted non-audit services fee cap of 70%. Calculation 
methods vary across the audit committees, with close to 50% performed at group level for 
the PIE sitting at group level. Other entities calculate the fee cap at subsidiary level (20%), 
at group level for all PIEs within the group (16%) or, where there is no group structure, at 

(23) Article 5(4) of the Regulation. 
(24)  Article 4(2) of the Regulation. 

10 

 
 
 
 
company level (16%). The non-audit services fee cap of 70% was exceeded according to 
1% of the audit committees. 

The auditor selection process 

Audit committees are responsible for the procedure of selecting the statutory auditor. Over 
95% (2018: 87%) report being in charge of the tendering process, although for some audit 
committees this remains challenging. 

19% of the audit committees mentioned appointing a new statutory auditor (or audit firm). 
For two thirds, the auditor had been in place up to 10 years before a new statutory auditor 
was appointed. 18% of cases had had the same auditor for over 20 years. 

Under Article 16(2) of the Audit Regulation, 90% of the PIEs that proceeded to tender had 
invited at least two statutory auditors or audit firms (6% more than in 2018). 

Figure 10: 

Statutory auditors/audit firms invited to participate in tender 

>15
4%

8-15
10%

1
10%

2-3
40%

2-7
76%

4-7
36%

35% of the audit committees did not give any specific consideration to the requirement 
that the tender process must not prevent firms that received less than 15% of their total fees 
from  PIEs  in  the  Member  State  in  the  previous  calendar  year  from  participating  in  the 
selection procedure(25). 

Regarding the announcement or disclosure of the tendering process, 76% did not follow 
the CEAOB guidelines ‘Appointment of statutory auditors or audit firms by public-interest 
entities’,  encouraging  PIEs  to  make  the  request  for  tender  public  to  enable  non-invited 
statutory auditors (or audit firms) to participate. 

The tender documentation was either made publicly available (13%) or sent to selected 
audit firms (87%, of which 25% went to the Big Four audit firms only). 

The numbers of statutory auditors (or audit firms) that submitted a bid are shown in the 
chart overleaf: 

(25)  Article 16(3)(a) of the Regulation. 

11 

 
 
 
 
Figure 11:  Number of statutory auditors/audit firms that submitted a bid 

8 or more bids
0%

1 bid
16%

4-7 bids
25%

2-3 bids
59%

73% of audit committees checked whether the audited entity would be able to demonstrate, 
upon request, to the competent authority that the selection procedure had been conducted 
in a fair manner. 

51% of audit committees who had changed the auditors indicated that it was too early to 
evaluate the impact of auditor rotation, or that no assessment had been made at the time of 
the questionnaire. 22% of audit committees rated the impact of auditor rotation as neutral 
and 12% rated the impact as positive. 

Monitoring the statutory audit 

Audit  committees  are  also  responsible  for  monitoring  statutory  audits.  77%  of  audit 
committees met with the statutory auditors (or the audit firm) more than once and with 
management present (36% did so without management present). 36% of audit committees 
assessed  audit  quality  with  criteria/metrics  such  as  quality  of  communication,  audit 
engagement team (including technical expertise displayed), degree of auditor challenge, 
and the amount of time spent on the statutory audit by the partner/senior audit management. 

Audit committees made little use (17%) of NCA inspection reports/findings from the last 
inspection of the statutory auditor in monitoring the performance of the statutory audit. 
Over half of the audit committees stated that no findings reports were available or they 
lacked access to them, while 30% of audit committees did not enquire whether findings 
were available. 

3.  KEY FINDINGS 

The key findings resulting from the CEAOB survey are as follows: 

1.  The decline in the number of individual auditors and audit firms observed in 

the last report continued.  

Impacts  such  as  the  age  structure  of  the  audit  profession,  its  capacity  to  attract  new 
professionals  and  the  increase  in  regrouping  professionals  into  bigger  structures  might 

12 

 
 
 
have both positive and negative consequences on the quality of audit delivered, and will 
need to be monitored over the next period. 

2.  On average, PIE audit firms derive 67% of their revenue from non-audit services. 
This is a decrease of about 2% compared to the previous period. It shows that the 
focus of audit firms continues to go beyond statutory audit work. 

It is a potential concern for regulators that the provision of non-audit services may affect 
independence  and  audit  quality.  It  is  thus  important  to  keep  monitoring  market 
developments closely, in particular while audit firms compete for new tasks, as a result of 
recent  EU  legislation  such  as  the  Corporate  Sustainability  Reporting  Directive(26) 
requiring the assurance of sustainability reports, and the Digital Services Act(27) requiring 
an  assessment  of  compliance  with  the  obligations  for  designated  very  large  online 
platforms and search engines. 

3.  A small shift in the European audit market was noted, where the Big Four have 
relinquished a portion of their market share in favour of the remaining 10 Key 
Audit Players, though they maintain a high degree of market concentration. 

The distribution of PIE audits amongst the players has changed, with a larger proportion 
of work carried out by other market players than the Big Four. However, changes in the 
market structure in terms of revenue are less important than the number of engagements. 

A slight increase was found in the frequency of joint audits in several EU Member States. 
However, joint audits are still primarily carried out in France. 

4.  While no “systemic risk” has been identified, NCAs continued to detect in their 
inspections a high frequency of deficiencies. They often, but not always, assessed 
the  level  of  responsiveness  of  audit  firms  to  deal  with  inspection  findings  as 
sufficient. 

On the one hand, this echoes the call for more transparency of inspection results by the 
public,  or  at  least  by  audit  committees,  to  provide  greater  accountability  and  better 
understanding of the level of audit quality at firm level. On the other hand, it is important 
for NCAs to  continue to press the audit firms to make improvements through the CEAOB 
and  European  colleges  of  regulators,  so  that  they  put  in  place  more  preventive  internal 
measures to avoid audit shortcomings. 

5. 

In  general,  audit  committees  have  improved  the  performance  of  their 
supervisory responsibilities since the last reporting period. 

Most  audit  committees  actively  monitor  auditor  independence  and  participate  in  the 
selection of new auditors or firms, as well as the approval of non-audit services. There is 
more  oversight  and  scrutiny  of  non-audit  services.  In  most  tenders,  several  statutory 
auditors or audit firms are invited, leading to an increase in the number of bids per tender. 

(26)  Directive  (EU)  2022/2464  of  the  European  Parliament  and  of  the  Council  of  14 December  2022 
amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 
2013/34/EU, as regards corporate sustainability reporting. 

(27)  Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a 

Single Market For Digital Services and amending Directive 2000/31/EC. 

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Given the significant role of audit committees in ensuring audit quality, further discussions 
are  needed  between  audit  committees  and  NCAs.  Harmonising  and  strengthening  the 
oversight of audit committees by NCAs should also be considered. 

6.  The effects of inflationary pressures, rising interest rates, geopolitical instability, 
and the increasing use of data analysis tools and artificial intelligence in the field 
of  audit  may  pose  challenges  to  the  audit  sector  over  the  coming  years.  The 
impacts of these changes should be monitored. 

Given the transnational nature of those changes, strengthening European collaboration and 
ensuring  coherence  between  regulations  and  cooperation  tools  will  facilitate  this 
monitoring process. Joint inspections between NCAs and through the CEAOB should be 
considered to improve the oversight of audit firms and networks operating throughout the 
EU. 

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