Private Equity and Audit: A Threat or an Opportunity?
The above report was published by the Institute of Chartered Accountants of Scotland (ICAS) in May 2025 and reported on by Accountancy Age in mid-June 2025.
The authors of the report emphasise the need for audit quality to remain unaffected by private equity’s growing influence in the profession, while acknowledging the value of identifying models different from the traditional partnership approach.
The paper assesses both risks and opportunities of private equity investment, given the uncertainty over the medium-to-long term impact on the audit profession. It highlights that the rules on ownership of audit firms have not been revisited in-depth for several years.
The ICAS report explains that the environment in which audit firms and wider business are operating continues to change at pace due to various societal factors:
- technological advances, including AI;
- geopolitical uncertainty; and
- sustainability related matters.
The audit profession itself continues to evolve as firms look to deploy greater use of AI tools, with the likelihood of more change in the profession in the next five years than in the last 50.
Whilst such a rapidly changing environment needs to be factored into considerations when examining the funding model for audit firms; government, the report highlights the fact that ‘regulators and professional bodies need to be cognisant of the accountancy profession’s duty to act in the public interest and the important role that audit plays in the allocation of capital’.
The report emphasises that an open and well-balanced approach to the question of private equity investment in audit firms is likely to identify both risks and opportunities which include the following:
| Opportunities | Risks |
| Succession planning | Audit quality |
| Capital investment which may enhance audit quality | Ethical challenges |
| Growth with economies of scale | Market impact (fees, limited choice etc.) |
| Successful partnerships between firms and investors | Culture |
| What happens next |
Read the report here.
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