Throughout the first half of 2020, there were 69 new audit engagements and 104 departures among audit firms in Canada. Of these auditor changes, there were only two accounting firms to post a net gain in new audit engagement clients during these six months.
As mentioned in a recent Canadian Accountant article, “audit client gains and losses are not necessarily an indication of the overall health of the audit industry. Yet the economic impact of the [Coronavirus] pandemic has affected the sector just as it has the greater economy. The first half of 2020 was noteworthy for how quickly the pandemic economic effects were felt by professional services providers.”
The table below presents a comprehensive view of the gains and losses of the Big Four and national firms in Canada during the first half of 2020. It shows the number of SEDAR audit clients each auditor gained or lost, and the auditor from or to which the client was won or lost.
Davidson & Company LLP – with a net of 8 new SEDAR audit clients – accounts for the most new clients among the auditor changes in the first half of 2020, resulting from 18 client gains and 10 losses. The national audit firm gained a total of $1 million in audit fees and increased its market cap by $153 million, primarily through the gain of three large companies:
- Copper Fox Metals Inc. with a market cap of $49 million;
- Plus Products Inc. with a market cap of $28 million and;
- Allegient Gold with a market cap of $22.7 million.
Among the Big Four firms, PwC was the sole auditor to result in positive net engagements, with 10 gains and 7 losses for a net of 3 new clients. While EY, Deloitte, and KPMG finished the first half of 2020 with net losses of 2, 4, and 5, respectively.
PwC, despite taking second place in terms of net engagements, led in market cap gains, bringing in $5.5 billion. Meanwhile, EY gained $4.5 billion in new market cap, primarily driven by the engagement of Genworth MI Canada Inc., which resulted in a market cap gain of $4.1 billion, roughly 90% of the total, for the Big Four firm.
In terms of audit fees gained, PwC holds the lead with $5.2 million in new audit fees. Newly engaged BlackBerry Limited (formerly Research In Motion Limited), with $3.3 million in audit fees, contributed 67% of this total. KPMG saw the second highest amount of fees gained with $2.9 million, while MNP followed with $1.7 million. EY and Davidson & Company round out the top 5, bringing in $1.3 and $1.0 million in new fees, respectively.
If you’re interested in an even further breakdown of auditor changes in Canada, be sure to check out this additional Canadian Accountant article.
Note: All amounts stated are in Canadian dollars.
For more information about Audit Analytics or this analysis, please contact us.
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