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Auditor Changes Roundup: Q1 2020

BF Borgers CPA, with a net of five new SEC audit clients, accounts for the most new SEC audit clients among all firms in Q1 2020. As mentioned in Accounting Today, this is the second quarter in a row that BF Borgers has topped the list of auditors bringing on new SEC clients, after bringing on six new clients in Q4 2019.

In terms of new client engagements in Q1 2020, EY’s 15 new engagements was the highest of any firm. Second place for most new engagements during the quarter was BF Borgers with ten, followed by Deloitte, with nine.

As seen in the matrix below, there were 57 new engagements and 68 departures during Q1 2020 among the major global and national firms. This is an increase in SEC-client auditor change activity from Q4 2019’s 24 new engagements, and a slight increase from Q1 2019’s 48 new engagements.

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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Leading the way among the Big Four audit firms, EY gained 15 new SEC clients in Q1 2020, followed by Deloitte with a gain of nine new SEC clients.

Among the other global & national firms, two firms had a positive net engagement of four audit clients this quarter: Grant Thornton and Crowe. Both firms gained five new clients and lost one.

In the following tables, we disaggregate the auditor changes by the size of companies gained or lost, as represented by the companies reported 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.

There was a three-way tie between EY, KPMG, and Deloitte for the top firm in terms of net engagements for Large Accelerated Filers in Q1 2020. The three firms each had one net engagement; EY gained five and lost four, KPMG gained four and lost three, and Deloitte gained three and lost two. The other member of the Big Four, PwC, followed in terms of net engagements, four engagements and four losses, for a net of zero Large Accelerated Filer clients during the quarter.

Among Large Accelerated Filers in Q1 2020, there were 16 audit firm engagements and 16 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. Companies identifying as an Accelerated Filer + Smaller Reporting Company are included in the analysis for Accelerated Filers, as these companies remain subject to the requirements that apply to Accelerated Filers, including a required auditor’s attestation of management’s assessment of internal control over financial reporting.

Crowe topped the list among Accelerated Filers, netting four new SEC audit clients in Q1 2020. For Accelerated Filers, four firms each netted two new audit clients: Armanino, Deloitte, EY, and Grant Thornton.

Among Accelerated Filers in Q1 2020, there were 31 audit firm engagements and 34 departures.

The last table presents the top gains and losses for Smaller Reporting Companies. Companies in this population are a combination of companies that did not identify as Large Accelerated Filers, Accelerated Filers, or Accelerated + Smaller Reporting Company. For a further disaggregated list by all separate filer statuses, please contact us.

BF Borgers CPA, with a net of eight new SEC audit clients, was the top firm among Non-Accelerated Filers and/or Smaller Reporting Companies, followed by M&K CPAs and PWR CPA, with a net of six and five new SEC audit clients, respectively.

There were twelve firms that each gained a net of two new SEC audit clients in Q1 2020, and nineteen firms that each gained a net of one new audit client.

Part of the movement among Smaller Reporting Companies and Non-Accelerated Filers during Q1 2020 can be attributed to the SEC suspension of the audit firm LBB & Associates on February 6, 2020 due to improper professional conduct.

In total, for Non-Accelerated Filers and/or Smaller Reporting Companies during Q1 2020, there were 93 engagements and 93 departures.

This analysis was created using the Auditor Changes database, powered by Audit Analytics. Audit Analytics tracks audit fees, restatements, and a wide range of audit and regulatory disclosures, with the ability to create daily email alerts for new disclosures by industry, auditor, and location.

For more information on this analysis, or to learn more about the Auditor Changes database, please contact us.

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