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Auditor Changes Roundup: Q1 2019

Deloitte, with a net of nine new SEC audit clients, accounts for the most new SEC audit clients among all firms in Q1 2019. Deloitte holds the top spot for most new clients among the Big Four and the major global and national firms in Q1 for the fourth year in a row.

Among the global and national firms, Grant Thornton netted the most new clients with six engagements and one departure, for a net of five new clients. RSM netted two new clients, with four engagements and two departures, while BDO netted one new client, with five engagements and four departures during the quarter.

As discussed in Accounting Today, Q1 2019 was a “low-scoring quarter”. There was plenty of client movement between audit firms, but no one audit firm dominated in terms of new SEC clients. Recently, including in Q1 2018, Q3 2018, and Q4 2018, mergers and acquisitions have contributed to the volume of client movement between firms, but numbers in Q1 2019 were not significantly influenced by M&A activity.

As seen in the matrix below, there were 48 engagements and 57 departures during Q1 2019 among the Big Four and major global and national firms. This is an increase in SEC-client auditor change activity from Q4 2018’s 27 engagements and 27 departures, and a slight decrease in activity from Q1 2018’s 52 engagements and 60 departures.

The table below presents a comprehensive view of the gains and losses of the major global and national firms. It shows how many SEC audit clients each auditor gained or lost, and also the auditor from or to which the client was won or lost.

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In the following tables, we disaggregate the auditor changes by the size of the companies gained or lost, as represented by the companies’ filing status. The first table shows auditor changes for Large Accelerated Filers, i.e., those with a worldwide public float of more than $700 million.

Deloitte was the top firm for Large Accelerated Filers in Q1 2019, with a net of five new SEC audit clients. Grant Thornton followed with three engagements and one loss, for a net of two Large Accelerated Filer clients during the quarter.

Among Large Accelerated Filers in Q1 2019, there were 19 audit firm engagements and 21 audit firm departures.

The next table presents a sample of the largest wins and losses for Accelerated Filers, which are companies with public float between $75 million and $700 million.

Deloitte and Grant Thornton were tied among Accelerated Filers in Q1 2019, each with three audit client engagements and no departures, for a net of three new SEC audit clients. For Accelerated Filers, five firms each netted one new client.

Among Accelerated Filers in Q1 2019, there were 14 audit firm engagements and 15 audit firm departures.

The last table presents the top five gains and losses for Smaller Reporting Companies.

Boyle CPA, with a net of five new SEC audit clients, was the top firm among Smaller Reporting Companies for Q1 2019. Six firms were tied for the next spot, each netting three new clients during the quarter.

Among Smaller Reporting Companies in Q1 2019, there were 78 audit firm engagements and 78 audit firm departures.

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