Auditor Changes Roundup: Q1 2022

J&S Associate led the way this quarter of new SEC audit clients with a net of five new engagements in Q1 2022. This broke BF Borgers streak from the last three quarters, although they still netted four new engagements to place second in the quarter. The overall engagements saw a decrease to 124 from 130 in the previous quarter.

As noted in Accounting Today’s recent article, “Kuala Lumpur-based J&S Associate brought on five new clients, with three of them coming from another Malaysian firm, Total Asia Associates, which has frequently appeared in these quarterly rankings, but is deregistering from the Public Company Accounting Oversight Board.”

This year we saw an increase in Big Four and global & national firm engagements, with 35 disclosed in Q1, up from 30 in Q4 2021. There were also 48 departures in the quarter which was a decrease from 49 departures in Q4.

The table below presents a complete view of the gains and losses of the major global and national firms. It shows the number of SEC audit clients that each auditor gained or lost. Additionally, it shows the auditor from or to which the client was won or lost.

Public Company audit clients Gains and Losses

For the third quarter in a row, Deloitte led the way among the Big Four firms, gaining seven new SEC clients and losing four during Q1 2022. EY and PwC both had a successful quarter as well with EY gaining seven and losing six SEC clients, and PwC gaining three and losing two clients. KPMG gained three and lost nine SEC clients.

Among the other global & national firms, only one firm had a positive net engagement this quarter: BKD LLP had two new clients and one loss. Moss Adams saw no auditor change activity in the quarter.

Ernst & Young ranked first in terms of net audit fees won in Q1 2022, bringing in $7.9 million. EY’s rank is largely due to the audit of PRA GROUP Inc., which brought in nearly $5.3 million in new audit fees.

Large Accelerated Filer Auditor Changes

In these tables below, we broke down the auditor changes by the size of companies gained or lostThese changes are 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.

Large Accelerated Filers: Gains and Losses Q1 2022

In Q1 2022, Deloitte, RSM, and EY all gained one net new Large Accelerated clients. Meanwhile, Grant Thornton LLP broke even with two wins and two losses.

Among Large Accelerate Filers in Q1 2022, there were 10 audit firm engagements and fourteen departures. This is a large increase from last quarter where there were five audit firm engagements and four departures.

Accelerated Filer Auditor Changes

The next table shows a sample of the largest wins and losses for Accelerated Filers. Accelerated Filers are companies with a public float between $75 million and $700 million. Companies that identify as an Accelerated Filer + Smaller Reporting Company are subject to Accelerated Filer requirements. These requirements include an auditor’s attestation of management’s assessment of internal control over financial reporting. As a result, we’ve included these companies in the analysis for Accelerated Filers.

Accelerated Filers and Accelerated Filers + Smaller Reporting Companies

There was a slight decrease this quarter of net client engagements for Accelerated Filers and/or Smaller Reporting Companies, with six firms gaining positive engagements. Headlining those firms was PwC gaining two net engagements. While this quarter saw a slight decrease, the change is still a sizable increase from Q3 2021, where we saw only two firms gain positive engagements.

Among Accelerated Filers and/or Smaller Reporting Companies, there were 12 engagements and 15 departures in Q1 2022.

Non-Accelerated Filers and Smaller Reporting Company Auditor Changes

The last table shows the top gains and losses for Smaller Reporting Companies. This population has a mix of companies that did not identify as Large Accelerated Filers, Accelerated Filers, or Accelerated + Smaller Reporting Company. For a list that is divided by all separate filer statuses, please contact us.

Non-Accelerated Filers and Smaller Reporting Companies

During Q1 2022, J&S Associate led the way for Non-Accelerated Filers and/or Smaller Reporting Companies with four net SEC clients. M&K CPAs PLLC, Paris Kreit & Chiu CPA LLP, and YCM CPA inc. all gained three net SEC clients. There were 20 firms that each gained a net of one Non-Accelerated Filer and/or Smaller Reporting Company.

As mentioned in our Q4 2020Q1 2021Q2 2021, Q3 2021, and Q4 2021 analyses, Withum and Marcum continued to see quite a few departures due to finalized acquisitions of SPAC clients; this trend has continued into Q1 of 2022. However, it is common for SPACs to change their auditor once an acquisition has been completed.

In total, for Non-Accelerated Filers and/or Smaller Reporting Companies during Q1 2022, there were 63 engagements and 76 departures.

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