Auditor Changes Roundup: Q4 2021

BF Borgers had the greatest number of new SEC audit clients for the third quarter in a row, with a net of eight new engagements in Q4 2021. As mentioned in the recent Accounting Today article, with the decrease in total new engagements from 135 to 130 in the previous quarter, the year-end results suggest the market for new audit clients may be stabilizing after the last year of volatility.

For the third quarter in a row there was a drop in Big Four and global & national firm engagements, with only 30 disclosed in Q4, down from 38 in Q3 2021. The departures also saw a decrease from 68 in Q3 to 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 & Losses

Deloitte once again led the way among the Big Four firms. Deloitte gained seven new SEC clients and lost three during Q4 2021. Meanwhile, PwC gained two new clients and lost three. EY gained three clients and lost four, and KPMG gained one and lost six.

Among the other global & national firms, three firms had positive net engagements this quarter: Grant Thornton had six new clients and one loss; EisnerAmper had one new client and no lost clients; and BKD had one new client and no lost clients.

BDO gained two and lost two clients and Crowe saw no auditor change activity in the quarter.

Deloitte ranked first in terms of net audit fees won in Q4 2021, bringing in a whopping $21.4 million. Deloitte’s rank is largely due to the audit of Athene Holding Ltd, which brought in $16 million in new audit fees.

Top Five Net Audit Fees Won: Q4 2021

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

In Q4 2021, Deloitte gained two new Large Accelerated clients. Meanwhile, Union Power HK CPA Limited, Ernst & Young, and Grant Thornton each gained one.

Among Large Accelerated Filers in Q4 2021, there were five audit firm engagements and four departures. This change is a slight decrease from last quarter where there were five audit firm engagements and five 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 significant increase this quarter of net client engagements for Accelerated Filers and/or Smaller Reporting Companies, with eight firms gaining positive engagements. Headlining those firms was Grant Thornton and MaloneBailey both gaining two net engagements. This change is a sizable increase from last quarter, where we saw only two firms gain positive engagements.

Among Accelerated Filers and/or Smaller Reporting Companies, there were 13 engagements and 11 departures in Q4 2021.

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 Q4 2021, Audit Alliance, Baker Tilly, and BF Borgers all gained a net total of five Non-Accelerated Filers and/or Smaller Reporting Companies. Grassi & Co gained a net of four Non-Accelerated Filers and/or Smaller Reporting Companies while WWC and Cherry Bekaert gained a net of three. There were 26 firms that each gained a net of one Non-Accelerated Filer and/or Smaller Reporting Company.

As mentioned in our Q4 2020Q1 2021, Q2 2021, and Q3 2021 analyses, Withum and Marcum continued to see quite a few departures due to finalized acquisitions of SPAC clients; this trend has continued into Q4 of 2021. 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 2021, there were 80 engagements and 121 departures.

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