Auditor Changes Roundup: Q2 2020

Grant Thornton, with a net of eight new SEC audit clients, accounts for the most SEC audit clients gained among all firms in Q2 2020. As mentioned in Accounting Today, EY had more new engagements during the quarter, but netted fewer than Grant Thornton.

In terms of new client engagements in Q2 2020, EY’S 12 engagements was the highest of any firm. Second place for most new engagements during the quarter was Grant Thornton with 11, followed by BF Borgers, with seven new engagements.

As seen in the matrix below, there were 51 new engagements and 62 departures during Q2 2020 among the major global and national firms. This is a decrease in SEC-client auditor change activity from Q1 2020’s 57 new engagements, and a slight decrease from Q2 2019′s 54 new engagements. It is somewhat surprising that auditor change activity among SEC-registered companies was not significantly diminished during Q2 2020 due to the COVID-19 pandemic globally interrupting operations for both corporations and audit firms.

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 12 new SEC clients in Q2 2020 with a net of four clients. PwC came in second in terms of new engagements with six, but lost 11 clients during the quarter. Deloitte and KPMG gained five and four new clients, respectively.

Among the other global & national firms, three firms had a positive net engagement of audit clients this quarter: Grant Thornton, Moss Adams, and BKD.

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 Q2 2020, EY gained three new Large Accelerated Filer clients with a net of two new clients. Deloitte and Mazars Auditores Consultores Ltda (Chile) each had one net engagement for Large Accelerated Filers during the quarter.

Among Large Accelerated Filers in Q2 2020, there were six audit firm engagements and five 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.

Grant Thornton topped the list among Accelerated Filers, netting six new SEC audit clients in Q2 2020. For Accelerated Filers, seven firms each netted one new audit client: EY, Armanino, BKD, Friedman, Macias Gini & O’Connell, Moss Adams, and RSM.

Among Accelerated Filers in Q2 2020, there were 27 audit firm engagements and 27 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, with a net of six new SEC audit clients, was the top firm among Non-Accelerated Filers and/or Smaller Reporting Companies for the second quarter in a row. Grant Thornton, Fruci & Associates, and Pan-China Singapore each had a net of two new Non-Accelerated Filer and/or Smaller Reporting Company SEC audit clients in Q2 2020.

Among Non-Accelerated Filers and/or Smaller Reporting Companies, there were 21 firms that each gained a net of one new SEC audit clients in Q2 2020.

In total, for Non-Accelerated Filers and/or Smaller Reporting Companies during Q2 2020, there were 62 engagements and 83 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 about Audit Analytics or this analysis, please contact us.

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