The UK's audit market is still dominated by the Big 4 firms, which presents a range of risks, the Financial Reporting Council has warned.
According to Paul Boyle, chief executive of the FRC, although steps have been taken to mitigate the impact of one of the leading auditors leaving the market, if this was to happen it would still lead to "significant uncertainty" in the sector.
He also warned that the issue is unlikely to be resolved any time soon.
Mr Boyle said: "Regardless of the actions taken by market participants, this risk is likely to remain significant in the medium to long term. It remains to be seen whether market-led actions will prove to be sufficient to reduce this risk to an acceptable level."
His comments came as the FRC published its fourth progress report on choice in the UK audit market.
The document is aimed at tracking the implementation of the Market Participants Group's recommendations on the country's audit market.
Currently, the Auditing Practices Board is examining the practice of auditors carrying out non-audit work for their clients.
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