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Auditor Changes Roundup: Q2 2021

Q2 2021 Auditor Changes

BF Borgers, with a net of nine new SEC audit clients, gained the most SEC audit clients in Q2 2021. As mentioned in Accounting Today, Denver-based Gries & Associates followed with seven new SEC clients, five of which came from AJ Robbins CPA; Robbins retired recently, according to one client’s 8-K.

As shown in the matrix below, there was a slight decrease in Big Four and Global & National Firms engagements, decreasing to 50 in Q2 from 56 in Q1 2021. There was a slight decrease in departures, as well, dropping to 66 from the prior quarter’s 68 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.

Leading the way among the Big Four firms, EY gained six new SEC clients and lost one during Q2 2021. Meanwhile, KPMG gained six new clients and lost three, Deloitte gained eight and lost nine, and PwC gained three and lost five.

Among the other global & national firms, two firms had positive net engagements this quarter: RSM (six new clients and five lost clients) and BKD (two new clients and one lost client). Moss Adams gained three clients and lost three clients to break even for the quarter.

Centurion ZD ranked first in terms of net audit fees won in Q2 2021, bringing in $6.5 million. This is due to their only new engagement, Chinese coffee company Luckin Coffee Incorporated [LKNCY]. The company filed for Chapter 15 bankruptcy in the US in February 2021.

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 2021, KPMG gained two new Large Accelerated clients, Grant Thornton and Deloitte netted one each, and PwC broke even.

Among Large Accelerated Filers in Q2 2021, there were six audit firm engagements and six 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, eight firms netted positive engagements: EY with three audit clients, and Deloitte and KPMG each with two. Wei Wei & Co, CliftonLarsonAllen, Weaver & Tidwell, Crowe, and BKD each netted one audit client.

Among Accelerated Filers and/or Smaller Reporting Companies, there were 19 engagements and 16 departures in Q2 2021.

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 Q2 2021, Gries & Associates gained a net total of four Non-Accelerated Filers and/or Smaller Reporting Companies. Audit Alliance, BF Borgers, EY, RSM, and WWC PC each gained a net of three Non-Accelerated Filers and/or Smaller Reporting Companies. J&S Associates, Onesstop Assurance, RBSM, and UHY each gained a net of two Non-Accelerated Filers and/or Smaller Reporting Companies. There were 19 firms that each gained a net of one Non-Accelerated Filer and/or Smaller Reporting Company.

As mentioned in our Q4 2020 and Q1 2021 analyses, Withum and Marcum each saw a significant number of departures due to finalized acquisitions of SPAC clients; this trend has continued into Q2 of 2021. However, it is not uncommon 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 2021, there were 76 engagements and 101 departures.

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