Auditor Changes Roundup: Q4 2020

Baker Tilly US LLP, with a net of 29 new SEC audit clients, accounts for the most SEC audit clients gained among auditor changes in Q4 2020. As mentioned in Accounting Today, Friedman LLP and BF Borgers CPA PC had the second and third most new engagements during the quarter (each with six), but netted fewer SEC clients.

As seen in the matrix below, there were 16 new engagements and 41 departures during Q4 2020 among the major global and national firms. This is a sharp decrease in engagements and a slight increase in departures in SEC-client auditor change activity from Q3 2020, where we saw 33 new engagements and 38 departures. For comparison, there were 24 new engagements and 33 departures during Q4 2019.

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, Deloitte gained five new SEC clients in Q4 2020, but lost three clients during the quarter. EY came in second in terms of new engagements with three gains and one loss, for a net of two new clients. PwC and KPMG each gained one new client while losing three and seven, respectively.

Among the other global & national firms, two firms had a positive net engagement of audit clients this quarter: Crowe (one client) and Moss Adams (one client).

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 Q4 2020, Deloitte gained three new Large Accelerated clients while EY netted one.

Among Large Accelerated Filers in Q4 2020, there were four audit firm engagements and four 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, there were only four firms that netted positive engagements: Baker Tilly with three audit clients and EY, TPS Thayer, and Crowe each with one audit client.

Baker Tilly brought on the most SEC clients in Q4 2020 due to a merger with Squar Milner LLP.

Among Accelerated Filers in Q4 2020, there were eight audit firm engagements and fifteen 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 Q4 2020, Baker Tilly gained a net total of 24 Non-Accelerated Filers and/or Smaller Reporting Companies. Friedman, Boyle CPA, Audit Alliance, JP Centurion & Partners, and BF Borgers all gained a net total of four 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.

Withum and Marcum each saw a significant number of departures due to finalized acquisitions of SPAC clients in Q4; 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 Q4 2020, there were 87 engagements and 107 departures.

This analysis was created using the Auditor Changes database, powered by Audit Analytics.

For more information about Audit Analytics or this analysis, please contact us.

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