Note: This blog has been updated to reflect a correction in the first table. A previous version displayed gross audit fees won, the updated version shows net audit fees won.
Grant Thornton, with a net of 12 new SEC audit clients, gained the most SEC audit clients during auditor changes in Q1 2021. As mentioned in Accounting Today, Macias, Gini & O’Connell followed closely behind with a net of nine new SEC clients due to a merger with Hall & Co. Deloitte ranked third overall with a net of eight new SEC clients.
As shown in the matrix below, there was a substantial increase this quarter in Big Four and Global & National Firms engagements, increasing to 56 in Q1 from just 16 in Q4 2020. There was an increase in departures as well, rising to 68 in Q1 from 41 in Q4 2020. With many companies’ fiscal years ending on December 31st, an uptick in auditor change activity is normal in Q1.
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.
Leading the way among the Big Four audit firms, Deloitte gained 12 new SEC clients and lost four during Q1 2021. EY broke even in terms of new engagements with seven gains and seven losses. PwC gained three new clients and lost six, while KPMG gained five new clients and lost 16 in Q1 2021.
Among the other global & national firms, two firms had a positive net engagement of audit clients this quarter: Grant Thornton (14 new clients and 2 lost clients) and BKD (5 new clients and 0 lost clients). EisnerAmper gained a client and lost a client to break even for the quarter.
Deloitte ranked first in terms of net audit fees won in 2020, bringing in a whopping $77.3 million. This is largely due to the engagement of General Electric Co [GE] that brought in $61.6 million in new audit fees.
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.
In Q1 2021, Deloitte gained five new Large Accelerated clients, while EY netted two. India-based firm KG Somani & Co. picked up one Large Accelerated SEC client during the quarter.
Among Large Accelerated Filers in Q1 2021, there were 16 audit firm engagements and 17 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.
For Accelerated Filers and/or Smaller Reporting Companies, four firms netted positive engagements: Grant Thornton with eight audit clients, BKD with two audit clients, and PwC and RSM each with one audit client.
Among Accelerated Filers and/or Smaller Reporting Companies in Q1 2021, there were 16 audit firm engagements and 19 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.
During Q1 2021, Deloitte gained a net total of five Non-Accelerated Filers and/or Smaller Reporting Companies. BDO, BF Borgers, BKD, EY, Grant Thornton, JP Centurion, Macias Gini & O’Connell, and MaloneBailey each gained a net of two Non-Accelerated Filers and/or Smaller Reporting Companies. There were 15 firms that each gained a net of one Non-Accelerated Filer and/or Smaller Reporting Company.
As mentioned in the Q4 2020 post, Withum and Marcum each saw a significant number of departures due to finalized acquisitions of SPAC clients in Q1; it is not uncommon for SPACs to change their auditor once an acquisition has been completed. This trend has continued into Q1 of 2021.
In total, for Non-Accelerated Filers and/or Smaller Reporting Companies during Q1 2021, there were 52 engagements and 70 departures.
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