February 13, 2012

Which Auditors Have the Most Public Company Clients?

Due to my high visibility I guess, I often am asked all types of statistic queries. That’s why I was excited to see this issue of the “Accounting News Report” that includes these stats:

– Big Four firms hold 43.5% of all public company clients (there were 8903 public company clients)

– Nine firms audit more than 50% of all public company clients

– Ernst & Young audits the most with 1177

– Analyzing the # of clients per category: E&Y led the accelerated filer category; PwC led the large accelerated filer category; Deloitte led the non-accelerated filer category; and BDO USA led the small reporting company category.

– Big Four hold a dominant share, no less than 67% in each of three categories (large accelerated filers, accelerated filers and non-accelerated filers) – but they hold only 7.2% in smaller company category

– 103 firms that comprise leading auditors hold 84.7% of all public company clients

– Median number of public company clients for 103 leading auditors is 25

An Interview with the PCAOB’s Jim Doty

A while back, the Journal of Accountancy published this interesting interview with new PCAOB Chair Jim Doty. This excerpt says it all regarding what to expect during his tenure (ie. change):

He said the greatest surprise he’s encountered in his new role is “the heightened self-awareness [auditors] have that the world is changing.” “I don’t see any firm that I have looked at and met with or heard from that doesn’t appreciate that, in fact, they’re in the middle of a process that can’t be reversed.”

Note that last week, the PCAOB settled a disciplinary order censuring Ernst & Young for the largest civil penalty it has ever imposed – $2 million, sanctioning four of its current and former partners for violating it rules and standards.

Survey Results: Big 8 Auditors – and a New Survey about the “Little Eight”

Last year, I ran a poll to see how many old-timers out there could name what used to be known as the Big 8 auditors. For the most part, members answered correctly although some were tripped up by “Arthur Siskel & Ebert.” As noted in Wikipedia, the Big 8 died back in 1987 and consisted of:

1. Arthur Andersen
2. Arthur Young & Co.
3. Coopers & Lybrand (originally Lybrand, Ross Bros., & Montgomery)
4. Ernst & Whinney (until 1979, Ernst & Ernst in the US and Whinney Murray in the UK)
5. Deloitte Haskins & Sells (until 1978 Haskins & Sells in the US and Deloitte & Co. in the UK)
6. Peat Marwick Mitchell (later Peat Marwick, then KPMG)
7. Price Waterhouse
8. Touche Ross

The concentration of auditors in a Big 4 doesn’t appear to be on the PCAOB’s plate at this time, with its recent concept release tackling so many other issues. I do note that, in 2008, the report of the US Treasury Committee on the Auditing Profession did discuss competition problems and issues within the profession, with a call for certain changes. And last year, as noted in this Bloomberg article, the Big Four were reported to be facing a probe by the UK’s antitrust regulator.

Anyways, a member threw down a more difficult challenge than naming the Big 8. She wants you to name the “Little Eight” that existed at the time of the “Big Eight.” Shoot me an email with your answers…

– Broc Romanek