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According to this AccountingWeb.com article, so-called second-tier accounting firms such as Crowe Chizek, Grant Thornton, BDO Siedman, and RSM McGladrey have capitalized on the relative shortcomings of the Big Four and picked up 417 ex-Big Four clients since 2003. I’m not sure how many of those are public companies – and find it hard to believe that too many are, based on what I blogged about a while back.

Last week at the Association of Corporate Counsel Annual Conference, I was a little surprised to hear Kayla Gillan, one of the PCAOB Board members, urge companies to drop their Big 4 auditors in favor of the second-tier firms. I understand the real need for the existing oligopoly to be broken (since the Big 4 now essentially live in a “too big to fail” world), but I believe market forces – not regulators – should motivate companies to diversify whom they select, unless regulators have more concrete reasons to provide guidance on which auditor to select (eg. if PCAOB inspections revealed that certain auditors are a higher risk than others).

Kayla acknowledged the practical limitations faced by most larger companies (eg. D&O insurer won’t allow company to use an auditor outside the Big 4) – but if I were selecting an auditor, I would also worry about the quality of auditing at the second tier firms just as much as any other firm. To wit, Grant Thornton sure has its hands full with the recent Refco implosion!

Is Kayla Gillan a Short-Timer?

As I blogged a month ago, Kayla’s term as a PCAOB Board member expires at the end of this month – and still no word as to whether SEC Chairman Cox will reappoint her for another 5-year term. Unlike for SEC Commissioners, there is no provision for Kayla to stay in office on a holdover basis (eg. until a successor was found or to conduct further deliberations), even if that is what the SEC Chair wanted. From all accounts, Kayla has been well-received as a PCAOB Board member and many have written letters in support of a second term.

Test Your Ability to Receive Conference Webcast – Today!

With Ed Woolard delivering the opening keynote at yesterday’s NACD Annual Conference, the Sunday NY Times article discussing Mr. Woolard’s 10-minute video was mentioned repeatedly – and the phones at our HQ are ringing off the hook for those that waited til the last minute to register for the “2nd Annual Executive Compensation Conference.”

Right now – you should test your ability to receive video streaming if you have registered for the Conference. Please don’t wait until later this week as testing is only available today and tomorrow.