Auditor Changes Roundup: Q3 2019

Assurance Dimensions, with a net of nine new SEC audit clients, accounts for the most new SEC audit clients among all firms in Q3 2019. As noted in Accounting Today, the acquisition of Soles Heyn & Company contributed to Assurance Dimensions’ high volume of new SEC clients for the quarter. Eight of the nine new clients for Assurance Dimensions were a result of the merger.

In terms of new client engagements in Q3 2019, Marcum’s 12 new engagements was the highest of any firm. There was a tie for second place, with Assurance Dimensions and Deloitte each winning nine new engagements. 

As seen in the matrix below, there were 38 new engagements and 33 departures during Q3 2019 among the major global and national firms. This is a notable decrease in SEC-client auditor change activity from Q2 2019’s 54 engagements and 72 departures. There were less engagements and more departures in Q3 2019 compared to Q3 2018’s 57 engagements and 30 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.

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Leading the way among the Big Four audit firms for the third quarter in a row, Deloitte netted seven new SEC audit clients in Q3 2019, with nine engagements and two departures. Deloitte has netted the most new SEC audit clients in the third quarter every year since 2015.

Among the other global & national audit firms,  Marcum came in second, netting eight new engagements. EY, RSM, Crowe, and BKD each had one net engagement in Q3 2019.

In the following tables, we disaggregate the auditor changes by the size of the companies gained or lost, as represented by the companies’ 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 minimal movement in Large Accelerated Filer audit clients in Q3 2019, with only four wins and three losses for all firms overall. Three firms each picked up one new Large Accelerated Filer: Crowe, Deloitte, and Eide Bailly. Eide Bailly’s new large accelerated filer client was a result of the merger with the firm Vavrinek, Trine, Day & Company.

No other firms had positive net engagements for Large Accelerated Filers in Q3 2019.  

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.

Deloitte and Eide Bailly topped the list among Accelerated Filers, netting four new SEC audit clients each. As mentioned previously, Eide Bailly’s merger with Vavrinek, Trine, Day & Company yielded four new accelerated filer clients for the firm this quarter.

For Accelerated Filers, six audit firms each netted one new client, while ten audit firms each lost a net of one audit client. 

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

Assurance Dimensions, with a net of nine new SEC audit clients, was the top firm among Non-Accelerated Filers and/or Smaller Reporting Companies. As mentioned previously, this increase can partly be attributed to its acquisition of Soles Heyn & Company. Marcum is not far behind, netting eight new SEC audit clients. Three firms each gained a net of three new SEC audit clients in Q3 2019.

There were 30 audit firms that each netted one new Non-Accelerated and/or Smaller Reporting audit client, and 31 firms that lost a net of one client. 

In total, for Non-Accelerated Filers and/or Smaller Reporting Companies during Q3 2019, there were 91 engagements and 95 departures.

This analysis was created using the Auditor Change 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.

To learn more about the Auditor Change database, or for subscription information, please contact us.